Tags: AS | Japan | Economy

Japan Sees Drop in Core Inflation as BOJ Mulls More Easing

Japan Sees Drop in Core Inflation as BOJ Mulls More Easing

Thursday, 29 October 2015 09:36 PM EDT

TOKYO (AP) — Japan's core inflation rate, which excludes volatile food prices, edged down 0.1 percent in September while household incomes and spending also fell, the government said Friday.

Getting consumers and businesses to spend more, a key aim of Prime Minister Shinzo Abe's economic policies, has so far proven difficult. Slow progress toward a 2 percent inflation goal has raised expectations that the central bank might announce an expansion of its already lavish monetary easing at a policy meeting that wraps up later in the day.

However, data released earlier this week showed stronger-than-expected manufacturing output in September, which could alleviate pressure on the BOJ to take further action to spur growth in the world's third-largest economy.

The latest data are typical of the mixed signals that have obscured the actual state of Japan's recovery.

Overall inflation was flat from a year earlier. Household spending fell 0.4 percent in September from a year earlier, while incomes slipped 1.5 percent.

Unemployment remained at 3.4 percent, and there were 1.24 jobs available for each job seeker, the data showed.

Tight labor conditions are expected to force companies to raise wages, in turn causing inflation to rise. But companies have expanded overtime and hired more part-time workers, to avoid significant increases in labor costs. That has hindered efforts to boost inflation and encourage more spending that would entice companies into expanding their investments in the Japanese market.

The plunge in oil prices over the past two years has also sapped any inflationary pressure, though inflation excluding both food and energy costs ticked up in September to 0.9 percent from 0.8 percent in August.

Bank of Japan Gov. Takehiko Kuroda might take that as another reason not to increase the central bank's asset purchases, which are injecting tens of billions of dollars of cash into the economy each month.

However, monetary easing may not have much impact, since with interest rates already near zero it is unlikely to boost corporate spending or purchases of homes, cars and other durable assets, said Richard Katz of the Oriental Economist.

"In an era of near-zero interest rates, monetary ease loses its normal punch," he wrote in a commentary.

Follow Elaine Kurtenbach: www.twitter.com/ekurtenbach

© Copyright 2026 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Asia
Japan's core inflation rate, which excludes volatile food prices, edged down 0.1 percent in September while household incomes and spending also fell, the government said Friday.Getting consumers and businesses to spend more, a key aim of Prime Minister Shinzo Abe's economic...
AS,Japan,Economy
365
2015-36-29
Thursday, 29 October 2015 09:36 PM
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