Japan consumer prices rise at fastest pace in 5 years, bodes well for BOJ
TOKYO (REUTERS) - Japanese consumer prices rose in June at their highest annual pace in nearly five years in an early sign of an end to persistent deflation, boding well for the central bank's bold stimulus plan to achieve its 2 per cent inflation target in two years.
The 0.4 per cent rise in core consumer prices, which is slightly higher than a median market forecast for a 0.3 per cent increase, was largely due to a rise in electricity bills and a weak yen that inflated the cost of gasoline imports.
But it is an encouraging sign for the Bank of Japan, keen to end 15 years of grinding deflation, as it suggests more companies are optimistic enough about the economy to believe they can raise prices on goods or at least not cut them.
The data is also a boost to Prime Minister Shinzo Abe's sweeping pro-growth policies that aim to pull the world's third largest economy out of stagnation.