"Job offers are surging but the average sum each employee is earning isn't rising much. That's why household income isn't increasing and consumption remains weak"
- Taro Saito, senior economist at NLI Research Institute
Japan's consumer price inflation eased for the third month in a row, while household spending also dropped, putting greater pressure on the Bank of Japan to boost inflation expectations, while the world's third biggest economy is in recession. The disappointing data came despite signs that Japan's labour market remained tight, with the jobless rate at a two-decade low of 3.1%, compared with 3.4% in September. Inflation slid further away from the central bank's 2% goal in October, with the BoJ's preferred gauge, CPI that excludes fresh fruit and energy prices, climbing 0.7% last month following September's 0.9% growth. The national core CPI, which strips out only fruit prices, dropped at a steady pace of 0.1% year-on-year in October. At the same time household spending declined 2.4% last month from a year earlier, against economists' expectations for a 0.1% gain, while disposable income decreased 0.3%.
Earlier this month, official figures showed that Japan's gross domestic product shrank 0.2% in the September quarter, or an annualised contraction of 0.8%, marking the second consecutive quarterly decline. Yet, many BoJ officials are reluctant to expand an already unprecedented massive stimulus programme unless sluggishness in foreign demand persists long enough to dent affect business confidence.
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