"Today's data show that an entrenched deflationary trend is coming closer to ending"
- Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co.
Japan's key measure of prices ended four years of declines, signalling success of Prime Minister Shinzo Abe's aggressive fiscal and monetary policy to escape deflation and reflate the world's third biggest economy. The nationwide core-core consumer price index, which excludes food and energy prices, was unchanged from a year earlier, after declining every month since December 2008, the statistics bureau said today. Price gains may help Abe sustain trust in the nation's recovery and encourage companies to increase wages as sales-tax hike planned for April risks to deal a blow to consumption. Regular wages, which strip out bonuses and overtime, fell 0.6% in August from the previous year, a 15th straight decline. As a result, Abe reassured that he would continue asking companies to raise salaries.
Tokyo's core CPI, seen as a leading indicator for inflation, gained 0.3% on year in October, in line with economists expectations. The nationwide consumer prices excluding fresh food advanced 0.7% from the previous year, a fourth consecutive gain, following a 0.8% increase in August. The Bank of Japan focuses on this gauge as a key measure, with policy makers expecting a 0.6% advance this year and 1.9% in the year starting April 2015. The outlook might be updated at a meeting next week. Abe and the nation's central bank are targeting 2% inflation.
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