Japan’s core consumer prices turned positive in September, the first increase in 18 months, due partly to rising energy prices.
In August, core inflation reversed a 12-month streak of declines and stayed flat, making September’s data announcement a potential start for an uptrend after prolonged disinflation.
Consumer Price Index (CPI), excluding fresh food prices, rose 0.1% year-on-year in September, official data showed on Friday. The index was boosted by rising prices of fuel and utilities, furniture and household utensils, culture and recreation, education, and housing.
Reversal in headline inflation
CPI for all items rose 0.2%, in contrast to 0.4% drop in August and marked the first gain in 13 months.
Communication charges fell a softer 6.4% compared with August’s 6.6%, the data showed. Japanese mobile carriers since late last year have reduced their fees on the back of strong government pressures.
Economists viewed that headline inflation will pick up pace once the impact of such reduction dissipates next year.
Inflation unlikely to top 1%
“As the drag from mobile phone tariffs fades in the first half of next year, underlying inflation will turn positive. However, we think it will struggle to break past 1%,” Tom Learmouth, Japan economist at Capital Economics, said in a note.
The Bank of Japan targets inflation rate of 2% before considering a rate hike.