The level of core consumer inflation in Tokyo fell in March for the second month in a row. That being said, it still remains above the central bank's target of 2%.
Tokyo's core consumer price index, a leading indicator measuring national trends, went up 3.2% year-on-year in March, exceeding the 3.1% growth forecast.
Prompted by the effect of state subsidies aimed at minimizing utility bills, the growth decelerated from 3.3% in February while hitting almost a 42-year high of 4.3% in January.
The Tokyo Core Consumer Price Index (CPI), which excludes fresh food and energy prices, is a critical indicator of demand-driven price pressure for the Bank of Japan. In March, it increased by 3.4% year-on-year, and by 3.1% in February.
These figures emphasize the difficulties Kazuo Ueda, the new Governor of the Bank of Japan, will face when assessing the change in recent cost-driven inflation.
Though industrial output bounced back in February, some analysts warn of rising downside risks since a decline in global demand for technology goods may backfire on the country's exports.
The report provided by Teikoku Databank also suggests a surge in prices of over 5,100 food products in April. What’s more, this trend is likely to continue until around October.
Figures released on Friday demonstrated a 6.6% rise in retail sales in February year-on-year, beating market forecasts of 5.8% growth. This was the result of strong sales at car dealerships and supermarkets.
With the already above-target inflation, there are market rumors that the Bank of Japan may change or end the yield curve control (YCC) policy when Ueda officially replaces Incumbent BOJ Governor Haruhiko Kuroda.
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