“Japan’s consumer prices fell for the seventh time in eight months, underscoring the risk that the central bank may struggle to reach a 2 percent inflation target unless it implements new easing measures earlier than planned.
Consumer prices excluding fresh food fell 0.2 percent in December from a year earlier, the government said in Tokyo today, matching the median estimate of 23 economists surveyed byBloomberg News. Bank of Japan (8301) Governor Masaaki Shirakawa said today that meeting the target would not be easy and that central banks need to be alert to financial bubbles.
Deputy Economy Minister Yasutoshi Nishimura said in an interview yesterday that reaching the inflation target announced this week will be difficult without more easing, as he endorsed further yen weakness. Minutes of a December BOJ meeting released today show that some members were in favor of making asset purchases in the first half of 2013 to support an economy that contracted in the second and third quarters of last year.
“There is no doubt that the 2 percent target is too high,” saidYuichi Kodama, Tokyo-based chief economist at Meiji Yasuda Life Insurance Co. “The BOJ will have to implement much looser measures.”
The yen fell, heading for a record stretch of weekly losses against the dollar. The currency was 0.2 percent lower at 90.50 per dollar as of 4:14 p.m in Tokyo. The Nikkei 225 Stock Average closed 2.9 percent higher, while the Topix Index capped its longest weekly winning streak since 1973.
The BOJ said this week that it will shift to Federal Reserve-style open-ended asset purchases from January 2014 and target the achievement of 2 percent inflation “at the earliest possible time.” The central bank’s forecasts this week showed inflation at 0.9 percent in the year starting April 2014.
