Japan’s consumer prices stopped falling last month for the first time in 13 months, ending the country’s longest deflationary stretch since 2011.
Prices, excluding those for fresh food, were unchanged from a year earlier, the Japanese Ministry of Internal Affairs and Communications reported yesterday in a result that matched an estimate from analysts.
Rising costs for hotels, processed food and energy cushioned the impact of mobile phone rates that have fallen sharply under pressure from outgoing Japanese Prime Minister Yoshihide Suga.
Despite last month’s slightly improved reading, Japan’s weak inflation pulse has trapped the Bank of Japan in a holding pattern while the Federal Reserve and other central banks move toward reining in pandemic stimulus. The bank on Wednesday kept its key stimulus tools in place and would likely do so for the foreseeable future.
“At least we can say prices aren’t falling, so the BOJ can continue to keep a close eye on it, without taking additional easing steps,” NLI Research Institute economist Taro Saito said.
While producer prices have jumped, climbing 5.5 percent last month, most Japanese firms aren’t choosing to pass those costs on to customers.
Global supply-chain snags and surging commodities prompted the Paris-based Organisation for Economic Co-operation and Development this week to raise its forecast for consumer price inflation this year and next in every G7 country, except Japan.
Last month’s inflation report continued to show the numbers being swayed by government initiatives that analysts say have made it hard to grasp underlying price trends.
The cost of hotel rooms rose nearly 50 percent compared with the level last summer, when the government’s “Go-To Travel” discounts to help the ailing tourism industry had just gone into effect.
Moving in the opposite direction, the cost of mobile phone service fell by almost the same amount, shaving 1.2 percentage points from the overall price index. Getting phone companies to slash rates was a top priority of the Suga administration.
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