TOKYO – Japan’s Consumer Price Index increased 0.5 percent year-on-year in August, logging its 32nd straight month of increase, mainly due to rising prices of household durable goods, the government said Friday.
The expansion of the index – which excludes fresh food due to its volatility – slowed from a 0.6 percent increase in July, according to the data published by Statistics Bureau of the Ministry of Internal Affairs and Communications, still far from the Bank of Japan’s 2-percent target.
The 2.3 percent year-on-year rise in prices of furniture and household utensils was the biggest contributing factor to the increase in the CPI in August, followed by the 1.2 percent rise in energy costs and 1.1 percent in culture and recreation.
The only sector to experience a decline in prices – of 1.2 percent – in the eighth month of the year was transport and communication.
The Bank of Japan launched a monetary easing program in 2013 to achieve an inflation target of 2 percent, although the timing of this goal has been repeatedly pushed back due to the fall in oil prices since late 2014 and the institution has been forced to adopt additional measures to move towards the target.
Adding to the challenges of achieving the inflation target will be the Oct. 1-scheduled increase in consumption tax (VAT) from 8 percent to 10 percent, which could have a negative impact on household spending and the evolution of prices.
Despite this, and the recent decision by the European Central Bank and the United States Federal Reserve to lower interest rates to stimulate economic growth, the Japanese central bank opted in its monthly meeting on Thursday to keep its monetary policy unchanged, a move analysts are describing as a wild card.