"We can expect more easing later this year if prices refuse to edge up"
-Junko Nishioka, chief economist at Royal Bank of Scotland Group
Japan's consumer prices declined for a fifth consecutive month in March, falling 0.5% from a year earlier, a sign that the nation's central bank is struggling to achieve its 2% inflation target in two years and Japan is still yet to emerge from 15-year long deflation. The decrease of CPI, which excludes fresh food prices, was somewhat worse than a 0.4% fall estimation by economists.
"Unlike other countries, the price of services in Japan has refused to rise. To push it up, however, wages will have to rise," said Yusuke Ishikawa, economist at Mizuho Research Institute , adding that looked hard as Japan's economic recovery was still fragile.
As a result the Bank of Japan kept its unconventional plan to increase money supply at the policy meeting today, which was in line with economists' expectations.
"We can expect more easing later this year if prices refuse to edge up," said Junko Nishioka, chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former BOJ official. "It's imperative for the BOJ to clearly communicate its objectives to maintain expectations that prices will rise."
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