"Expectations for deflation, deeply embedded among the public, are very persistent. It appears quite difficult for monetary easing implemented by Governor Kuroda to achieve a positive cycle of inflation and economic recovery."
-Yuichi Kodama, chief economist at Meiji Yasuda Life Insurance
Japan's industrial production expanded more than expected in April, adding to hopes that Prime Minister Shinzo Abe's measures are stimulating the national economy. The preliminary data showed Japans industrial production climbed 1.7% year-on-year in April, topping forecasts of a 0.8% jump. On March, industrial production rose 0.9%, reported the Trade Ministry. Meanwhile, forecasts for May and June remained gloomy as experts predict flat output this month and a 1.4% contraction in June.
The government's data indicated a further decline in consumer prices in April. Consumer prices have dropped for sixth month in a row despite the BoJ efforts to meet a 2% inflation target. However, a drop in prices was slightly smaller than in previous moths. Japan's national CPI declined 0.7% in April, in line with expectations. Meanwhile, core consumer prices, which exclude volatile items such as food and include oil costs, slid by annualized 0.4%, matching estimates. The decline was smaller than a 0.5% drop in the previous month.
In April, the BoJ pledged to inject more than $1.4 trillion into the country's economy in less than two years to boost growth and reach 2% inflation in two-year period.