"Kuroda's comments suggest he really wants an increase in the sales tax as scheduled. Fiscal reform is needed for Japan's economy."
-Yuichi Kodama, chief economist in Tokyo at Meiji Yasuda Life Insurance Co.
A measure of change in the price of services purchased by Japanese corporations, showed a steady pace last month, albeit it was unchanged from the previous month, the Bank of Japans said Monday. Japanese corporate service prices, which are considered as a leading indicator of consumer inflation, advanced 0.4% year-on-year in July, from the same pace a month earlier, widely meeting analysts' forecasts. On a monthly basis, the price index posted no change at all, as it did in the preceding month. While not taking into account international transportation, CSPI dropped 0.1% annually and stayed unchanged on a monthly basis. The latest figures are suggesting that we are likely to see the same pace of growth in consumer prices, making it more difficult for policymakers to achieve the 2% inflation target within two years.
Separately, the Economy Minister Akira Amari expressed his view that Shinzo Abe will consider an implementation of the widely discussed sales-tax hike by early October, before a meeting of Asia-Pacific leaders in Indonesia. A commission comprising Japanese policymakers, academics and even business leaders is set to begin on Monday to consider whether the world's third largest economy is strong enough to withstand a planned increase in sales tax. Earlier, figures showed the economy expanded 2.6% in the second quarter, supporting a case for an increase.
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