"Consumers will be hit in the pocket from rising prices and the upcoming sales-tax hike. The onus is now on companies to convert their profits into wage increases and capital spending."
- Masamichi Adachi, a senior economist at JPMorgan Chase & Co.
Dukascopy traders are selling the Japanese Yen in 55% of the time, suggesting they expect it to depreciate. The latest fundamental data, however, are speaking in favour of Yen's appreciation, as key inflation rate moved closer to the BoJ's threshold level, while unemployment rate and industrial production improved significantly in December, diminishing concerns the central bank will put the trigger once again soon. The USD/JPY currency pair plunged to 132.90 immediately after the news release.
According to the Statistics Bureau, the measure of consumer prices excluding food rose 1.3% in December, beating analysts' expectations for 1.2% gain and marking the biggest gain since October 2008. A broader gauge of inflation that includes all items in consumers' basket, accelerated 1.6% over the period. The figures give a significant boost to Shinzo Abe, who has pledged to end 15 years of deflation and revive economic growth.
Separately, data showed that industrial output inched higher 1.1% in December, recovering from the previous month's 0.1% drop. On a yearly basis production soared 7.3%, led by gains in general-purpose, production and business oriented machinery. What is more important is the fact unemployment rate fell to 3.7% last month from 4.0% a month earlier.
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