Japan inflation registers first back-to-back rise since 2015

A seller waits for customers at a seafood shop in Tokyo, Japan.
A seller waits for customers at a seafood shop in Tokyo, Japan.PHOTO: REUTERS

TOKYO (AFP, BLOOMBERG) - Japanese consumer prices picked up in February for the second straight month boosted by a rebound in energy prices, official data showed Friday, as Tokyo aims to end years of deflation.

Nationwide consumer prices, excluding volatile costs of fresh food, rose 0.2 per cent from a year earlier, the internal affairs ministry said, matching the market consensus.

Stripping out fresh food and energy, consumer prices rose 0.1 per cent, while household spending declined 3.8 per cent in February. The unemployment rate was 2.8 per cent in February.

Many economists expect higher oil prices and a weaker yen to push core inflation to near 1 per cent later this year. But Bank of Japan Governor Haruhiko Kuroda has warned that price momentum toward the central bank's goal of 2 per cent is not sufficient, and that he would need solid evidence of underlying inflation before raising a key long-term interest-rate target.

For now, there is little sign of sustainable inflation, with weak wage gains during spring negotiations indicating consumer spending will likely remain subdued.

Rising concerns about Donald Trump's ability to implement his pro-growth strategy have strengthened the yen over the past two weeks, underscoring uncertainty in the outlook for inflation and growth in Japan.

"Gains in consumer prices are very slow," Hideo Kumano, a former BOJ official and chief economist at Dai-ichi Life Research Institute, said before the results were released. "It's just oil and a weak yen that are expected to lift inflation going forward. There is no engine to generate sustainable inflation."