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Japan's inflation rate slides to zero in February jeopardizing BOJ's reflation target

Xinhua, March 27, 2015 Adjust font size:

Japan's annual core consumer inflation rate slid to zero in February, marking its lowest level in nearly two years as a fall in oil prices continued to weigh, according to data released Friday by the Ministry of Internal Affairs and Communications.

The ministry's data showed that growth had been the slowest since May 2013, and excluding volatile fresh food prices, came in at 102.5 against the base of 100 set in 2010.

While factoring out the effects of last April's tax hike, consumer prices slid from a 0.2 percent rise logged in January to zero in February, as energy prices diving 2.1 percent in the recording period dragged down the nation's overall inflation.

Following the data being released, economists here were quick to speculate whether the slide could prompt the Bank of Japan (BOJ) to bring plans for further monetary easing forward to earlier this year, to keep the bank's lofty inflation goals, which are now somewhat in jeopardy, in sight.

The headline core CPI rose 2 percent in February on-year, falling short of median economists' expectations for a 2.1 percent increase.

The core CPI for Tokyo's 23 wards, largely seen as precursor of prices across the country and the central bank's most important leading indicator, rose 2.2 percent in March from a year earlier to 101.9, the ministry's data also showed.

Ongoing effects of last year's tax hike by 3 percent to 8 percent in April, coupled with declining household spending is responsible for consumer prices in the Tokyo Metropolitan area missing median economists' expectations of a 2.1 percent increase, economists said. Endi