TOKYO: The Bank of Japan said on Thursday the core consumer price index rose 2.2percent excluding special factors in February, releasing the new gauge for the first time in what analysts say is an effort to show underlying inflation on track for further rate hikes. The new index, which strips out “institutional factors” such as any changes in the sales tax rate or energy-related subsidies, showed a sharper year-on-year rise than the 1.6percent in the benchmark core CPI figure the internal affairs ministry announced this week.
BOJ Governor Kazuo Ueda revealed the plan to disclose the new indicator on inflation as well as an updated staff estimate on Japan’s neutral rate of interest after the latest policy-setting meeting this month — a move he described as part of efforts to enhance communication.
The BOJ said in a statement on Thursday it would publish the data every month, two days after the nationwide CPI figures are announced. Core-core CPI, which also excludes energy prices, rose 2.7percent excluding special factors, compared with 2.5percent under the government’s calculation, the BOJ said.
The gauge is expected to help the BOJ argue that underlying inflation remains on track to stably hit 2percent, even if headline inflation briefly slides below the level, analysts say.
The BOJ said core inflation indicators, which are obtained by removing transitory disturbances and institutional factors from actual movements observed in consumer prices, are frequently used for inflation analysis.
The new price gauge adds to data the BOJ looks at in determining Japan’s underlying inflation, or price moves driven by domestic demand rather than cost-push factors. While the central bank already releases estimates of consumer inflation excluding the impact of fresh food and fuel costs, such indices have been swayed by various government steps to ease the burden on households from rising living costs.
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