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Japan's core CPI rose 0.8 percent, while spending logs biggest rise in 3 1/2 years

Japan's core CPI rose 0.8 percent, while spending logs biggest rise in 3 1/2 years

Japan got a mixed bag of economic signals when the government reported Friday that January's core inflation rate remained at its highest level in nearly a decade while consumer spending logged its biggest gain in 3 1/2 years. The jobless rate, meanwhile, stayed at 3.8 percent.
The core consumer price index, which excludes volatile fresh food prices, rose 0.8 percent in January from a year ago, the Ministry of Internal Affairs and Communications said, tying its biggest increase in nearly a decade amid concerns that rising oil and commodities prices could dampen consumer appetite.
That's the fourth monthly gain and the same rise as posted in December. It was the highest inflation reading since March 1998.
Japan has long struggled with deflation, or falling prices, but Friday's data indicates that higher prices for imported oil and commodities are exerting upward pressure on living costs.
Separate data released by the same ministry said household spending grew an inflation-adjusted 3.6 percent in January from a year earlier, with a third of the gain coming from increased buying of cars and car parts.
That was the strongest rise in spending since a 5 percent surge in May 2004, the ministry said. The figure far exceeded the 0.1 percent gain expected by economists surveyed by Dow Jones Newswires and Nikkei.
Still, economists were pessimistic about Japan's economic outlook.
"There are various downside risks to consumption," said Noriaki Haseyama, an economist at Dai-Ichi Life Research Institute. "Improvement in employment and income growth is sluggish, the prices of oil products and food items are rising, (domestic) stock prices are unstable, and there are concerns about a decelerating U.S. economy."
Economy Minister Hiroko Ota also sounded cautious.
"Mild rises in consumer prices could begin to have an impact on consumers ... so even though January's figure was solid, consumption isn't as strong" as the data suggest, she said at a news conference.
The core CPI for the Tokyo metropolitan area, considered a leading indicator for nationwide consumer prices, rose 0.4 percent in February after rising 0.4 percent the previous month, the ministry's data showed.
The jobless rate remained at 3.8 percent, where it has been since November, after registering 4.0 percent in both September and October. Figures showed that the total number of jobless was down 80,000 on year, marking the 26th consecutive month of decline.


Updated : 2020-12-05 17:37 GMT+08:00