TOKYO (AFP) – Japan released a string of lacklustre economic data Friday, with inflation hitting its lowest level in a year, dealing another blow to Tokyo’s attempts to conquer years of falling prices and tepid growth.
The figures come after Prime Minister Shinzo Abe called a snap election for next month and delayed a sales tax hike after a previous levy increase hammered spending and pushed the world’s number three economy into recession.
Japanese consumer inflation came in at 2.9 per cent in October compared with a year earlier, official data showed, matching market forecasts but slowing from 3.0 per cent in September.
Prices mainly rose largely because Tokyo raised the sales tax from 5.0 per cent to 8.0 per cent on April 1.
Adjusted for the hike, nationwide core inflation rate came in at 0.9 per cent, against 1.0 per cent in the previous month and its lowest level since October 2013.
The weak reading makes the Bank of Japan’s 2.0 per cent inflation target – which it initially aimed to hit next year – look increasingly out of reach.
The BoJ shocked markets last month by saying it would expand its asset-buying stimulus programme to about 80 trillion yen ($676 billion) annually, as part of Tokyo’s bid to overcome deflation and kickstart the economy.
“Even despite the BoJ’s surprise move, we maintain our view that there is a very long way to go before achieving the +2.0 per cent target,” Credit Agricole said.
The yen weakened further after the reading with the dollar at 118.21 yen against 117.74 yen in London on Thursday.
Also Friday, figures showed factory production in October edged up a better-than-expected 0.2 per cent on-month, the second straight increase, as exports improved.
“It is a positive set of data that hints at hopes for future recovery in production,” SMBC Nikko Securities said in a note.
Separate figures showed the country’s unemployment rate slipped to 3.5 per cent from 3.6 per cent, while retail sales rose 1.4 per cent in October. However, household spending fell 4.0 per cent on-year, the seventh successive decline.