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Japan's core inflation rate picks up in Aug.

This file photo shows a supermarket in Tokyo in August 2018. (Kyodo)

TOKYO (Kyodo) -- Japan's underlying inflation rate edged up in August amid rising energy costs, government data showed Friday, but tepid consumer goods prices underscored the Bank of Japan's uphill battle to achieve its 2 percent inflation target.

The nationwide core consumer price index, which excludes fresh food prices because of their volatility, rose 0.9 percent from a year earlier, gaining momentum from a 0.8 percent rise in July. The index rose for the 20th straight month, according to the Ministry of Internal Affairs and Communications.

Oil products such as gasoline and kerosene were the biggest contributor to the price gains, while hotel lodgings were also up amid an increase in inbound tourists.

Meanwhile, the prices of clothing and home appliances such as refrigerators were lower, suggesting household spending is not strong enough to embolden companies to make markups.

A ministry official who briefed reporters said that less than half of the items covered in the survey saw a price increase for the first time since November 2013, a sign that inflation has not spread.

The BOJ is pursuing the 2 percent target in the belief that a steady increase in prices is conducive to economic activity, but it has struggled to lift inflation despite more than five years of aggressive monetary easing.

The central bank decided earlier this week to maintain ultralow interest rates and massive asset purchases, with Governor Haruhiko Kuroda denying normalization of the bank's monetary policy would come anytime soon.

Koya Miyamae, an economist at SMBC Nikko Securities Inc., said he expects inflation to remain at the current level through this year as a rise in vegetable prices becomes a drain on the real income of consumers.

"Core CPI could briefly hit 1.0 percent but is unlikely to stabilize there," he said.

"We'll also see a smaller contribution from energy next year, meaning if wage gains don't translate to more robust growth in core-core CPI, overall inflation could weaken."

Consumer prices including fresh food rose 1.3 percent, boosted from a 0.9 percent rise in July by pricier vegetables. So-called core-core consumer prices, which exclude both fresh food and energy, rose 0.4 percent, picking up from a 0.3 percent rise the previous month.

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