(Bloomberg) -- Japanese inflation held steady in July, underscoring the persistent weakness of consumer prices that leaves the Bank of Japan’s 2 percent goal nowhere in sight.
Key Takeaways
Japan’s drawn-out quest to spur inflation has prompted the central bank to tweak its policy settings, a nod to the mounting side effects its aggressive stimulus is having on financial institutions and market functioning. The BOJ also lowered its inflation outlook last month and promised to keep extremely low interest rates in place for an extended period of time, giving little impression that major progress is on the horizon. While it ticked up in July, deceleration in previous months of the inflation gauge that excludes fresh food and energy shows that underlying price pressures remain soft.
Economist Views
- SMBC Nikko’s Koya Miyamae, Rina Adachi and Yoshimasa Maruyama had expected a plateauing of energy prices to keep overall price increases largely in line with the previous month.
- The labor shortage is exerting upward pressure on production costs in services, but companies are not passing on those increases to consumers in the form of higher prices due to stiff competition in the private sector, they wrote in a note ahead of the release.