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Economy

Bank of Japan laments government push to cut mobile fees

Suggested 40% cut would dampen central bank's efforts to spur inflation

Lower smartphone prices and wireless service fees risk weighing on inflation without encouraging spending elsewhere.

TOKYO -- The Japanese government's recent push for mobile phone carriers to lower their service fees has vexed the Bank of Japan, which fears another drag on already sluggish inflation.

Like volatility in the yen and crude oil, falling mobile device prices and service fees due to competition have frequently held down overall consumer price growth, to the BOJ's frustration.

"A further drop in wireless fees would put downward pressure on prices," a senior central bank official said.

The BOJ's quarterly economic outlook report released in July called falling mobile-related prices a "sectoral shock" affecting inflation. It estimated that this reduced growth in the consumer price index by 0.16 percentage point in June.

Chief Cabinet Secretary Yoshihide Suga asserted last month that wireless service fees have room to fall another 40% or so. He urged more competition among carriers, citing a government analysis showing much higher prices in Japan than in other markets such as the U.K.

In an August poll by Nikkei, 65% of respondents said they consider wireless fees too high. If prices fall, then consumers will spend the money saved elsewhere, the government's thinking goes.

This argument that the boost to nonmobile consumption would support prices had some traction even within the BOJ around spring 2017 when a drop in telecom fees put downward pressure on prices. But a private-sector survey found that a plurality of respondents set aside the savings on their wireless bills, indicating that there was no guarantee that falling prices would simply redirect consumption elsewhere.

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