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Economy

Japan inflation picks up in January on higher utility bills

Core consumer prices rise 0.8% year on year

TOKYO (Kyodo) -- Japan's underlying inflation rate picked up in January amid higher utility bills but remained far below the Bank of Japan's target, government data showed Friday.

Core consumer prices, excluding fresh food items because of their volatility, rose 0.8 percent from a year earlier, up from a 0.7 percent gain in December.

That snapped a three-month run of flat or slower price gains that had pushed the BOJ's 2 percent inflation target farther from reach. The central bank's current projections do not show the goal being achieved until at least fiscal 2021.

Rising energy costs had been the main driver of inflation in Japan, but a sharp decline in the global market for crude oil late last year has put downward pressure on consumer items such as gasoline and kerosene.

Gasoline prices in January were nearly flat while electricity and gas bills, which track oil prices but with a time lag of several months, continued to rise, according to the data released by the Ministry of Internal Affairs and Communications.

Accommodation and international travel package were also higher as consumers took longer New Year's holidays. A price hike by the Yomiuri Shimbun, the country's largest daily, also contributed to core consumer prices rising for the 25th straight month.

But Takeshi Minami, chief economist at the Norinchukin Research Institute, said most of these price gains came from special factors, not a rise in household spending as hoped by the BOJ.

"That means there is still a long way to go to 2 percent inflation, and the BOJ will probably decide to continue its current monetary easing at its March policy meeting."

"If economic conditions begin to worsen, due to the consumption tax hike scheduled in October for example, it may even need to take further action," he said.

So-called core-core consumer prices, which exclude both fresh food and energy items, rose 0.4 percent compared with a 0.3 percent increase in December.

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