Japan's core consumer prices rose 0.3 percent in April, marking the 23rd successive month of increase, as falling prices for crude oil continues to impact the government and the Bank of Japan's reflationary efforts, the Ministry of Internal Affairs and Communications said Friday.
Stripped of the effects of the sales tax hike last April, the reading came in flat in the latest recording period, following a 0. 2 percent rise logged a month earlier, with economists noting that the central bank's lofty inflation target, the deadline of which has already been extended once, is again looking dubious as regards the bank's current timeframe.
The ministry said the core consumer price index, which excludes volatile fresh food prices, stood at 103.3 against the 2010 base of 100, this compares to 103.0 against the base of 100 set in 2010, logged in March.
According to the central bank, its main inflation gauge slowed from 0.2 percent in March. Including the effects of last April's sales tax hike from 5 to 8 percent, prices rose 0.3 percent from a year earlier, ahead of a 0.2 percent gain expected by economists.
The bank said that following the latest figures showing that the tax hike pushed down the inflation rate by 0.3 percent in the recording period, the impact of the higher tax levy will drop out of the data from May, the BOJ said.
It was a fall in oil and energy prices that have been widely blamed for the stalled inflation rate, with energy prices tumbling 3.4 percent in April, compared to March's decline of just 1.0 percent. The drop in oil prices is weighing on the overall index, the ministry said.
"Japan could see 0.2 percent deflation before September, as a 46 percent fall in oil from last year's peak in June pushes down consumer prices," said Tomo Kinoshita, an economist at Nomura Holdings Inc.
The majority view among local economists is that core consumer prices declining at some point this year is now highly likely.
But the BOJ continues to hold off on additional monetary easing, opting to maintain its expansion of the monetary base at an annual pace of 80 trillion yen (about 670 billion U.S. dollars), despite the latest economic figures showing that inflation here has effectively ground to a halt again and prices will likely turn further downward henceforth.
Further adding to the a grim situation for the bank and government's reflationary drive are rapid currency fluctuations in the market, with the yen's plummet to a near eight-year low versus the U.S. dollar on Wednesday and hitting a 13-year low against the greenback on Thursday, concerning both government and banking officials.
And while the U.S. dollar fell to the upper 123 yen zone Friday morning in Tokyo, following Japan's Finance Minister Taro Aso's remarks describing the yen's rapid depreciation as being "rough," made after meeting with U.S. Treasury Secretary Jack Lew in Dresden, Germany where Group of Seven finance ministers and central bankers are currently meeting, BOJ Governor Haruhiko Kuroda, while saying that stability in currency exchange markets is favorable, in contrast to Aso, believes that major currencies have not veered from economic fundamentals recently.
"We aren't thinking about any specifics for additional measures now as we expect the price trend will steadily improve," Kuroda said, in contrast to the view of many leading economists, at a recent news conference, and despite mounting pressure on the bank to get its sluggish inflation vehicle back on track.
For Tokyo's 23 wards in May, a data set widely regarded as a precursor of nationwide prices in the coming months, the core CPI rose 0.2 percent from a year earlier to 102.2, according to the data released by the ministry, compared to a 0.4 percent increase logged a month earlier./.