Inflation in Japan accelerated in October, but the rate of price growth is still half the target of the central bank, despite the hardest labor market in a few decades, Bloomberg writes.
Consumer prices excluding the cost of fresh food (the key indicator of inflation, monitored by the Central Bank) in October rose by 0.8% in annual terms. The indicator coincided with the forecast of analysts polled by Bloomberg.
Consumer prices excluding fresh food and energy carriers increased by 0.2% in line with the forecast.
The overall inflation rate in Japan in October was 0.2%. The indicator also coincided with the expectations of experts.
Consumer spending did not change in annual terms, while a decrease of 0.3% was expected.
While Japan’s economy shows steady growth, inflation remains below the target set by the Bank of Japan at 2%. One reason is that the tightening of the labor market has not led to a strong increase in wages and households retain tight control over their spending.
The unemployment rate in Japan remained at the level of 2.8%, coinciding with the forecast.
The ratio of the number of vacancies and job seekers was 1.55 instead of the expected 1.52. The indicator is at its maximum since the mid-1970s.
“The working-age population is declining, and the economy is growing, so the labor market is inevitably becoming more rigid, in areas such as health care, social security and elderly care, jobs are not being filled, and the gap between supply and demand continues to increase,” – told the agency Bloomberg chief economist Tokai Tokyo Research Center in Tokyo Hiroaki Muto.
Japanese companies’ capital investments increased by 4.2% in the third quarter in annual terms. Analysts forecast an increase of 3.2%.
The profit of companies grew by 5.5% (forecast: + 18.4%). The company’s revenue increased by 4.8%.
Japan’s GDP in the III quarter increased by 1.4% compared with the same period last year. The economy of Japan has grown for the seventh consecutive quarter, demonstrating the longest growth since 2001, as the restoration of exports and the increase in business investment offset the decline in consumer spending.
The Organization for Economic Co-operation and Development (OECD) this week lowered its forecast for GDP growth in Japan for 2017 to 1.5%. The organization maintained its forecast for the following year at 1.2%. In 2019, growth is expected to slow to 1%.
