TOKYO • Japan's consumer prices dropped for a second month as central bank governor Haruhiko Kuroda struggles to spur inflation with record asset purchases and negative interest rates.
Consumer prices excluding fresh food fell 0.3 per cent last month from a year earlier, after dropping by the same amount in March, according to a statistics bureau report yesterday.
The data is the final set of consumer price indicators to be released before the Bank of Japan's board meets on June 15 and 16. The lack of price growth will intensify pressure on the central bank to consider further monetary stimulus after Mr Kuroda disappointed the markets by taking no action at April's meeting.
"Japan's inflation is going to remain weak," said Mr Takashi Shiono, an economist at Credit Suisse Group in Tokyo. "If you look at economic and price fundamentals, the BOJ has to ease further soon."
The economy grew at an annualised 1.7 per cent rate in the first three months of this year after shrinking at the same pace in the prior period, a government report earlier this month showed.
The yen, which has surged 9.4 per cent this year, was little changed at 109.89 against the US dollar in Tokyo. The Topix stock index rose 0.5 per cent.
A separate index calculated by the Bank of Japan, which excludes fresh food and energy costs but includes processed food costs, rose 0.9 per cent last month from a year earlier.
The data underscores the fragile nature of Japan's recovery and may give Prime Minister Shinzo Abe justification to delay a scheduled increase in the sales tax next year.
It also casts doubt on the central bank's argument that the underlying price trend is improving steadily, thanks to its massive stimulus programme.
Some analysts warned that Japan may be returning to deflation despite Mr Abe's stimulus policies to eradicate sustained price declines, including three years of aggressive money printing.
The bank's board at last month's meeting pushed back the timing of reaching the 2 per cent inflation target for a fourth time. It now expects to meet the target during the 12 months through March 2018.
Some companies have begun cutting prices. Seiyu, Wal-Mart's Japan unit, announced this month that it will lower prices of 100 goods in the next two years.