TOKYO • Japan's consumer prices rose for the fifth straight month in May, government data showed yesterday, but weak household spending underlined the challenges facing Tokyo's fight to rid the world's No. 3 economy of deflation.
The country's prospects have been improving on the back of strong exports, with investments linked to the Tokyo 2020 Olympics also giving the economy a shot in the arm. The labour market is tight and business confidence is strong.
But consumer spending remains tepid and the Bank of Japan has struggled to lift inflation despite years of aggressive monetary easing.
After stripping out the volatile cost of fresh food, the inflation rate came in at 0.4 per cent, the fifth consecutive monthly rise following a 0.3 per cent rise in April and a 0.2 per cent gain in March and February, according to the internal affairs ministry. But yesterday's figures are still way off the Bank of Japan's 2.0 per cent inflation target - seen as crucial to conqueringthe country's long struggle to slay deflation, blamed for holding back the once-booming economy.
Separate data showed household spending fell 0.1 per cent in May from a year ago, extending its declining streak of more than a year.
Japan has been struggling to defeat deflation and slow growth that followed the collapse of an equity and property market bubble in the early nineties.