Japanese consumer inflation rose for the first time in four months in February as the pace of declines in electricity and city gas fees slowed, government data showed Friday.
The core consumer price index, which excludes volatile fresh food prices, climbed 2.8%, from a year before to 106.5 points against the 2020 base of 100, rising for the 30th straight month, the Japanese Jiji Press said quoting official data released Friday by the Ministry of Internal Affairs and Communications.
Electricity fees fell 2.5%, following a 21% decline in January, and city gas rates dropped 13.8% after a 22.8 % fall.
The effects of government subsidies introduced in January last year to help lower electricity and gas costs waned.
Overall energy prices fell 1.7%, a smaller decline than January's 12.1%, drop while food prices, excluding fresh food, rose 5.3%.
Meanwhile, the Bank of Japan (BOJ) on Friday highlighted the need to boost its research and analytical capabilities in the first medium-term strategic plan compiled under academic-turned governor Kazuo Ueda, who took office in April last year.
“The Bank will enhance its capabilities in policy making, research and analysis, in fulfilling its mission of achieving price and financial stability,” the BOJ said outlining key principles of its business operations from fiscal 2024 through 2028.
The plan came after the BOJ's decision on Tuesday to end its unorthodox monetary easing, which marked a historic shift away from its focus on reflating growth with decades of massive stimulus.
“With greater uncertainties and faster changes in external environment, the Bank has faced broader and more complex challenges to its policies and business operations,” the BOJ said, underscoring its increased focus on grasping changes in the economy that could warrant further interest rate hikes.
Price hike
Japan’s Nikkei closed at an all-time high on Friday, boosted by record gains on Wall Street on Thursday and a rally in automaker stocks on the back of a falling yen.
According to Reuters, the Nikkei rose 0.18% to close at 40,888.43%, after reaching 41,087.75 points earlier in the session, exceeding the highest level ever recorded during trading.
The index, which exceeded 41,000 points for the first time, rose 5.68% during the week and has risen 22% since the beginning of this year. The broader Topix index rose 0.61% to 2,813.22 points.
“The market expected the yen to rise against the dollar in the current quarter, but that did not happen, which is a positive thing for Japanese companies,” said Shuji Hosui, senior analyst at Daiwa Securities.
He added: “The yen is still weaker, as Japanese (government bond) yields are not expected to rise much.” The Bank of Japan said it will maintain its monetary easing policy so that the gap in yields between the United States and Japan does not narrow.”
Bank of Japan Governor Kazuo Ueda on Thursday pledged to continue supporting the economy through ultra-easy monetary policy.
A lower yen helps exporters because it increases the volume of revenues from abroad in yen.
