Roundup: Japan's consumer prices edge up 0.2 pct on year in March

Japan's core consumer prices stripped of the effects of the sales tax hike last April rose 0.2 percent in March after hitting zero in February, the Ministry of Internal Affairs and Communications said Friday.

Taking into account the impact of last April's sales tax hike from 5 percent to 8 percent, consumer prices rose 2.2 percent from a year earlier to 103.0 against the base of 100 set in 2010, the ministry said, adding that this marked the 22nd consecutive month the index has risen.

The latest figures came after the Bank of Japan (BOJ) on Thursday voted to extend its lofty 2 percent inflation timeframe from this fiscal year until the first half of fiscal 2016 as consumer prices have been impacted by the global oil glut and revised downwards from a 1-percent-rise forecast in January.

The BOJ, however, took markets by surprise by holding off on additional monetary easing, opting to maintain its expansion of the monetary base at an annual pace of 80 trillion yen (about 672 billion U.S. dollars), despite the latest economic figures showing that inflation here had effectively ground to a halt and prices could turn downward henceforth.

Some analysts said Friday, following the new data, that Japan's economic recovery is still frail and overly reliant on the U.S. economy and increased capital spending.

"Economic indicators suggest Japan's recovery momentum isn't as strong as we expected. Yet, looking ahead, exports will probably increase because of the U.S. recovery, boosting capital spending, which can be a driver for the economy," said Masaki Kuwahara, an economist at Nomura Securities Co.

But the BOJ's decision to stay on additional easing came as the U.S. Commerce Department announced that the world's largest economy grew between January and March at an annualized rate of just 0.2 percent, owing to sluggish exports and diminished consumer spending, well below economists' expectations.

The news sent markets here tumbling to a four-month low, with the Nikkei stock index plummeting 2.69 percent and the Topix index closing down 2.13 percent, triggering concerns among market players about the health of the U.S. economy and the BOJ chief's perpetually upbeat remarks.

Local analysts said that the market was expecting the bank to unveil fresh stimulus measures following inflation stalling and the U.S. economy showing signs of weakness.

"Investors who were optimistic for additional easing are winding down their positions. Prices look like they're about to turn negative, so there's just cause for additional easing. The BOJ is insisting the foundation for prices is still strong. There' s a discord with reality," noted Tsutomu Yamada, a market analyst at Kabu.com Securities Co. Endi