Japan's core CPI falls 0.2 pct in July on lower mobile fees

Source: Xinhua| 2021-08-20 12:38:17|Editor: huaxia

TOKYO, Aug. 20 (Xinhua) -- Japan's core consumer prices in July decreased by 0.2 percent year-on-year, as lower mobile data fees overweighed rising energy prices, government data showed Friday.

According to the Ministry of Internal Affairs and Communications, nationwide core consumer prices, excluding volatile fresh food items, declined for the 12th consecutive month. The quest for a 2 percent inflation target from the Bank of Japan (BOJ) faces a big challenge.

The ministry switched the base year to 2020 from 2015 and the calculation method for the consumer price index (CPI). As the result, the pace of decline in the core CPI slowed from 0.5 percent in June under the new base year.

The data proves the view that in contrast with the United States, which is under inflation worries, Japan is unlikely to see inflation accelerating and the BOJ will need to maintain an ultra-loose monetary policy for a longer period.

Mobile data usage fees, which weigh more in the current calculation of the CPI, fell 39.6 percent in July from a year ago because major Japanese carriers now offer cheaper plans in response to the government's proposal.

However, higher energy prices and accommodation fees lifted the core CPI.

From the ministry data, rising crude oil prices led the kerosene and the gasoline prices to surge 25.2 percent and 19.6 percent correspondingly.

As hotel operators rose prices in line with the increase in the number of customers from a year ago, accommodation fees increased 17.3 percent.

The government's subsidy campaign, which was designed to spur local tourism, triggered sharp falls in accommodation fees after launching in July last year. The campaign has been suspended nationwide in Japan since last December due to a resurgence of COVID-19 infections.

Junichi Makino, a chief economist at SMBC Nikko Securities Inc, said "The impact of mobile phone fees is large," adding "Excluding special factors such as the lowering of mobile fees and the 'Go To Travel' campaign, however, the core CPI is up 0.5 percent."

"Although severe macroeconomic conditions continue, the CPI data does not change our view on the underlying price trend...and Japan is not headed toward deflation," Makino said.

With the spread of the highly contagious Delta variant, Japan is still struggling to curb the COVID-19 infections. Due to the strong exports and capital spending, the Japanese overall economy grew in the April-June quarter, but private consumption remained weak.

The so-called core-core consumer prices, which exclude fresh food and energy items, decreased by 0.6 percent for the fourth straight month. Enditem

KEY WORDS: Japan,Core CPI,July