Japan's core consumer prices rose slightly in the year to July, mostly on increases in energy costs, but analysts say an end to the country's long battle with deflation remains far off due to stagnant consumption. Prolonged deflation is adding to strains for the economy as it grapples with a strong yen and slowing global growth, just as it tries to emerge from a slump caused by the devastating earthquake in March.
The Bank of Japan has pledged to keep interest rates virtually at zero until consumer inflation of 1 percent is foreseen. "Price falls for television sets and other durable goods slowed somewhat, while gasoline prices rose slightly more than expected, which was the reason behind the rise in consumer prices," said Junko Nishioka, chief economist at RBS Securities Japan.
The core consumer price index (CPI), which includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood, rose 0.1 percent in July from a year earlier, against the median estimate for a 0.1 percent fall. The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell 0.5 percent.
Core consumer prices in Tokyo, available a month before the nation-wide data, fell 0.2 percent in the year to August, against a median estimate for a 0.1 percent drop. The government sharply revised down this year's CPI data earlier this month after changing the base year and the components making up the index to better reflect trends in consumer spending.
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