Japan’s slowing inflation boosts expectations not to abandon monetary easing policy

Japan’s core consumer prices slowed in July, boosting expectations that the “central” Bank of Japan will not rush to abandon its monetary easing policy even though inflation remains above its target.

The Ministry of Internal Affairs and Communications data showed yesterday that the core consumer price index, which includes petroleum products but excludes volatile fresh food prices, rose by 3.1 per cent, in line with average market estimates.

The index had risen 3.3 per cent in the previous month, exceeding the central bank’s target of 2 per cent for the 16 consecutive month.

A separate index excluding the impact of fresh food and energy prices showed consumer prices rising 4.3 per cent year-on-year in July, up from the previous month.

The Central Bank says wage pressure has not yet increased sufficiently, requiring a new adjustment to its strong monetary easing policy.

On the other hand, Elon Musk’s visit to Japan raises speculation on social media about the purpose of the billionaire’s first announced trip to Japan in nine years.

Musk wrote late Thursday on the ex-Twitter platform he bought last year that “I just arrived in great Japan.”