- Takashi Shiono, Credit Suisse Group
Japan's Consumer Price Index dropped for a second straight month in April as weak consumption discouraged firms from raising prices and central bank Governor Haruhiko Kuroda struggles to spur inflation with record asset purchases and negative interest rates. According to a statistics bureau report, the national core consumer prices, which exclude fresh food, dropped 0.3% in April from a year earlier, equalling the multi-year low hit in March, while the expectations were at a decline of 0.4%. Moreover, indicating that deflationary pressures may strengthen in the months ahead, the core CPI reading for Tokyo declined to -0.5% on a year-on-year basis, below the 0.3% drop of March and anticipations for an acceleration to -0.4%.
In addition, a separate research showed that the core-core CPI rate which strips out both energy and food prices, rose by 0.7% from a year earlier, matching the figure of March. Meanwhile, headline CPI declined 0.3% from a year earlier following a 0.1% annualized drop in March. The lack of price growth will intensify pressure on the Bank of Japan to consider further monetary stimulus after Kuroda disappointed the markets by taking no action at April's meeting. The data is the final set of consumer price indicators to be released before the BOJ's board meets on June 15-16.
© Dukascopy Bank SA