- Hiroaki Muto, senior economist at Sumitomo Mitsui Asset Management
Following the upbeat data from Japan, which reduced the immediate probability of more easing measures from the nation's central bank, the Japanese Yen inched higher. Japan's core consumer prices advanced for a ninth consecutive month in February from the last year, adding to further evidence that the economy is making progress against years of stagnation and deflation. Japan's core CPI, which strips out volatile prices of fresh food, rose 1.3% on year in February, according to the Statistics Bureau. The gain followed a 1.3% climb in previous two months, which was the most rapid since the 1.9% seen in October 2008. Japan's consumer inflation has significantly accelerated in the previous several months since turning positive in June 2013, with the BoJ's monetary easing abating the Yen's value.
However, household spending and retail sales came weaker than a month earlier, as snowstorms across Japan kept many consumers at home. Despite that, there are already signs that sales are increasing this month as shoppers rush before the sales tax hike from 5% to 8% next week. Retail sales rose for a seventh straight month, increasing 3.6% in February from a year earlier, while household spending plunged 2.5% on year, being well shy of forecasts for a gain of 0.1% following the 1.1% rise a month earlier.
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