Ahead of BOJ decision, Japan consumer prices down 0.3% in March

Japan's core consumer prices fell a worse-than-expected 0.3 per cent in March on-year, the government said ahead of a central bank meeting where policymakers are expected to expand already aggressive stimulus measures.

Japan's 0.3 per cent core consumer price index reading was worse than a Bloomberg forecast of a 0.2 per cent fall. (AFP/Fred Dufour)

TOKYO: Japan's core consumer prices fell a worse-than-expected 0.3 per cent in March on-year, the government said on Thursday (Apr 28), ahead of a central bank meeting where policymakers are expected to expand already aggressive stimulus measures.

The core consumer price index reading released by the Internal Affairs Ministry was worse than a Bloomberg forecast of a 0.2 per cent fall. That marked the fastest decline since April 2013 due to lower prices for gasoline and slowing gains in prices for durable goods and overseas travel.

CPI, which excludes volatile fresh food prices, was mired at zero in January and February.

Separate data showed household spending in March fell 5.3 per cent from a year earlier due to lower spending on clothes, leisure activities and gasoline. That was more than the median estimate for a 4.2 per cent annual decline and marked the fastest decline since March 2015.

In one positive sign, industrial production rose 3.6 per cent in March from the previous month, compared with a 2.9 per cent increase forecast by economists.
The jobs-applicants ratio also rose to 1.30 in March, which shows labour demand is the strongest since December 1991 when the ratio was 1.31.
AWAITING BOJ
The BOJ is likely to debate expanding monetary stimulus at a policy meeting ending later on Thursday, as sluggish global demand hurts exports and weak wage growth undermines private consumption, sources have told Reuters.
"Oil prices falls and the waning effect from a weak yen pushed down core CPI," said Hidenobu Tokuda, senior economist at Mizuho Research Institute.
"We expect the BOJ will ease policy today. It will probably be difficult politically for the BOJ to further cut negative interest rates, so we expect the central bank will focus on qualitative easing such as increasing ETF buying."
Any attempts by the BOJ to push down already low yields may anger financial institutions still struggling to adjust to January's negative rates decision.
Cutting the rate on excess reserves from the current minus 0.1 per cent or providing funds to banks at a negative rate may thus prove difficult, some analysts say.

- AFP/Reuters/sk

Ahead of BOJ decision, Japan consumer prices down 0.3% in March

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