Japan’s Core CPI Falls For Eighth Consecutive Month in March - Forex News by FX Leaders
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Japan’s Core CPI Falls For Eighth Consecutive Month in March

Posted Friday, April 23, 2021 by
Aiswarya Gopan • 1 min read

Japan is staring at a possible looming deflation crisis even as its economy struggles in the face of the ongoing coronavirus pandemic, with the nation currently experiencing a fourth wave. Core consumer prices across the world’s third largest economy declined for the eighth consecutive month, with the core CPI falling by 0.1% YoY in March.

While March’s reading came in line with economists’ forecast, it did reveal a slower pace of decline than the 0.4% fall seen in February. The core CPI includes volatile energy costs but excludes food costs, and posted a decline in Japan on the back of a severe drop in cellphone fees, although it did enjoy some support from an increase in crude oil prices.

Analysts expect inflation to pick up in Japan after the government successfully brings the latest wave of the pandemic under control. The rollout of vaccines and the lifting of restrictions could spur pent-up demand and possibly drive domestic consumption higher, contributing to a hike in inflation.

At its upcoming rate review meeting, the BOJ is likely to trim its inflation forecasts following the release of these latest figures. In addition, the weak data could exert additional pressure on the central bank to continue with its stimulus efforts to drive inflation higher.

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