Japan’s core consumer prices rose 0.7 percent in April from a year earlier, government data showed on Friday, showing little of the inflationary momentum needed to reach the central bank’s elusive 2 percent target.

The increase in the core consumer price index, which includes oil products but excludes volatile fresh food costs, fell slightly short of a median market forecast for a 0.8 percent rise. It followed a 0.9 percent gain in March.

While recent rises in oil costs may underpin price growth, many analysts expect inflation to fall short of the Bank of Japan’s goal in coming years as companies remain wary of raising prices for fear of scaring away cost-sensitive consumers.

Subdued inflation and signs that growth may have reached its peak could discourage BOJ policymakers from signalling their intention to end ultra-loose monetary policy, analysts say.

Japan’s economy contracted more than expected at the start of this year, suggesting growth has peaked after the best run of expansion in decades.

While many analysts expect growth to rebound in the current quarter, any indication of the economy hitting a plateau would be a bad omen for policymakers’ efforts to lift Japan sustainably out of deflation.

The BOJ last month dropped a timeframe for hitting its price goal and Governor Haruhiko Kuroda has conceded that pushing up inflation expectations would take time.

Source: cnbc china
Japan's consumer price growth slows in April