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 January 28, 2016 - 12:07 PM EST
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UPDATE2: Japan's consumer prices rise for 2nd month in Dec.

consumer prices rose 0.1 percent in December from a year earlier for the second straight monthly increase on rising food and durable goods costs, the government said Friday, but plunging oil prices are expected to continue pressuring inflation.

The core consumer price index, which excludes volatile fresh food prices, stood at 103.3 against the 2010 base of 100, the Ministry of Internal Affairs and Communications said. The inflation rate remains far below the 2 percent target set by the Bank of Japan

In 2015,

consumer prices climbed 0.5 percent to 103.2 from the previous year, rising for the third straight year, buoyed by the lingering effects of a consumption tax hike in April 2014.

But the gain was much smaller than a 2.6 percent increase in 2014. Excluding the impact of the sales tax hike, the core CPI was flat in 2015.

Crude oil prices, which have fallen to the lowest levels in more than 12 years, could push back inflation rates below 0 percent in the future.

"The effects of lower crude oil prices and a firming yen since December last year are expected to emerge in spring," said Satoshi Osanai, an economist at the Daiwa Institute of Research. "The CPI could enter negative territory again this spring."

A stronger yen normally causes downward pressure on prices through cheaper import costs.

In December, energy prices dropped 11.0 percent, with gasoline prices plunging 17.8 percent and electricity fees falling 5.7 percent.

Meanwhile, food prices rose 2.3 percent, while those of televisions surged 22.4 percent.

The core CPI for

23 wards in January, seen as an indicator for the nationwide index, fell 0.1 percent from a year earlier to 101.1 for the first decline in three months.

Meanwhile, average monthly household spending in December dropped an inflation-adjusted 4.4 percent from a year earlier to 318,254 yen ($2,677) for the fourth straight monthly decline, the ministry said in a separate report.

Spending for clothing dived 16.8 percent and that for utility dropped 10.7 percent, as relatively warmer weather slowed sales of winter clothes and also weakened heating demand.

The ministry kept intact its basic assessment, saying some weakness is seen in household spending, after downgrading the view the previous month.

The income of salaried households decreased a real 2.9 percent to an average 900,229 yen for the fourth straight monthly fall.

Household spending figures are a key indicator of private consumption, which accounts for about 60 percent of Japanese gross domestic product.


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Source: News (January 28, 2016 - 12:07 PM EST)

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