Japan’s Core Inflation Remains Low in May

The core inflation of Japan is still low in the month of May, signifying that the central bank is still far from the reaching the target of 2 percent in spite of massive stimulus program.

Weak inflation induces the central bank to take some time before exiting the ultra-loose monetary policy despite the Federal Reserve and the ECB are far from rollbacks.

The core consumer price index includes oil but not volatile fresh food prices, kept growth from April with 0.7 0.7 percent year-on-year in May, which is in line with the median estimate of economists, as shown on the data of Ministry of Internal Affairs and Communications data on Friday. The data came out after the central bank reduce their inflation assessment on Friday, which means that the BOJ is not in a rush to ease their massive stimulus.

Japan’s economy will probably bounce off in the second quarter from following the contraction in the first three months of the year and ended its longest growth since the bubble economy in the 1980s. Japan’s risk on outlook but not least from a heated China-US trade that has affected financial markets.

A private survey on Friday showed that Japanese manufacturing activity expanded in June at a faster pace than the previous month but export orders contracted for the first time in almost two years in a warning sign about overseas demand.

The nine-board member of the central bank is likely to analyze the Japanese inflation when they have thas it is remained to be problematically subdued when they run their quarterly review of its long-term growth and price projections.

Weak inflation may just be transient but there are other factors to consider such as advancement of Internet shopping and hard competition among large merchandise retailers that affects the price, according to the BOJ board member, Yukitoshi Funo, on Thursday.