Japan inflation slows to 3.1% in February

It is the first deceleration in over a year and marks a drop from January, when consumer prices jumped 4.2 per cent on-year — the highest level since September 1981, fuelled in part by higher energy bills.

UBS economist Masamichi Adachi had said ahead of the data release that he expected a lower inflation rate in February “due to a discount on energy price with the government’s subsidies”.

The 3.1 percent rise is above the Bank of Japan’s two-percent target but remains lower than the sky-high inflation seen in the United States and elsewhere.

When both fresh food and energy prices are excluded, the figure for February is 3.5 per cent.

The central bank sees the price increases as the result of temporary factors and left its ultra-easy monetary policy unchanged in a policy meeting this month.

It was the final meeting for outgoing governor Haruhiko Kuroda, who is stepping down after a decade in which he enacted a raft of extraordinary ultra-loose policies.

Despite pressure to hike interest rates to tackle inflation as other central banks worldwide have done, the BoJ has said it first wants to see evidence of more sustained rises, including salary increases.

AFP