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By Hiroshi Inoue
TOKYO (MNI) - Japan's core consumer price index accelerated in January but
Bank of Japan officials are little moved in their outlook as they are still
concerned that sluggish private spending will slow corporate price hikes, MNI
Japan's core CPI rose 0.8% y/y in January, a 37th straight gain, with the
pace accelerating from 0.7% in December but lower than the 0.9% seen in April
The gain was boosted by higher energy prices (+0.8% y/y in January vs.
-0.6% in December) and solid service prices.
The contribution from energy turned positive (+0.07 percentage point) in
January from negative (-0.05 pp in December).
Prices for goods rose 1.3% y/y in January, slowing from +1.5% in December.
But prices for goods excluding perishable foods rose 1.6% in January,
accelerating from +1.4% in December.
--SOLID PROCESSED FOODS
Service prices rose 1.0% in January after rising 1.1% in December.
But prices for processed foods, accounting for 15% of the total CPI which
is the BOJ officials focus, rose 1.5% in January following +1.5% in December.
Prices for eating out, another key BOJ focus, remained firm, up 3.3% in
January following a 3.3% gain in December, showing corporate retail price hikes
The core-core CPI excluding fresh food and energy items which BOJ officials
focus on to gauge the underlying trend rose 0.8% y/y in January, slowing from
+0.9 in December, for the 31st straight rise.
--CORONAVIRUS IMPACT WORRY
Despite the solid prices, bank officials are worried that service prices
could slow in the coming months in the wake of the drop in Chinese tourists in
Japan due to the coronavirus outbreak.
Sales at restaurants and department stores and in the transport sector are
falling following the drop in foreign tourists in Japan, and profits continued
to decline which in turn will lower retail prices.
The infectious disease has been confirmed in Japan, increasing the risk
that Japanese consumers will refrain from going out and spending.
Many companies announced the cancellation of events and entertainments amid
the expanding coronavirus outbreak.
Economic data showed private consumption remained weak after the sales tax
hike on Oct. 1.
Bank officials are worried that the impact of the coronavirus will increase
downward pressure on consumer spending and retail prices.
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