Japan remains at brink of deflation

Posted On 27 Mar 2015

Tag: Japan CPI, Japan deflation, Oil prices

The national Japanese consumer price index (CPI) rose 2.0 percent in February from the year-ago period, according to government data on Friday. This was down from a 2.2 percent rise in January and lower than forecasts for a rise of 2.1 percent. This was a core figure excludes fresh food prices but includes energy prices.

The data will likely increase expectations that the Bank of Japan (BOJ) will have to undertake further stimulus measures to stimulate the economy.

Excluding the effects of the national consumption sales tax hike in April, CPI was unchanged in February from January, when it increased 0.2 percent. This was the first time since May 2013 that CPI stopped rising.

The Japanese economy is at risk of deflation due to plunging oil prices and subdued demand. The Bank of Japan has pledged to achieve a 2 percent target inflation rate and promised to double the country’s monetary base with aggressive stimulus measures – 80 trillion yen a year. This asset purchase program began last October.

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