Japan Struggles with Flat Core Consumer Prices

Hiruki Nakamura
27 Mar, 2015
New York City

Nikkei index declined and extended losses for the week to 1.4% after the latest inflation data fell short of expectations. The weak fuel prices dragged the overall inflation below the Bank of Japan target.

[R]4:30 PM Tokyo – Nikkei index declined and extended losses for the week to 1.4% after the latest inflation data fell short of expectations. The weak fuel prices dragged the overall inflation below the Bank of Japan target.[/R]

Market indexes in Tokyo extended losses and for the week the Nikkei index lost 1.4%.

The latest measure of inflation showed consumer prices rose 2% in February from a year ago, 21st monthly increase in a row, the government said.

The consumer price index in February dropped 0.2% to 102.9 from the previous month but climbed 2.2% from a year ago month, the Ministry of Communications and Internal Affairs said.

The department added prices for food soared 4.1% followed by 3.5% increase in clothing, fuel and recreation.

The core consumer prices for Tokyo area rose 2.2% from a year ago as the index increased to 101.9, the ministry said today.

Preliminary consumer price index for Ku-area of Tokyo in March jumped 0.4% to 102.1 from February and advanced 2.2% from a year ago.

Average monthly household spending in February declined after adjusting for inflation by 2.9% to 265,632 yen, a decline for the 11th month in a row.

Household income declined 0.7% to an average of 488,519 yen, a fall for the 17th month in a row.

The Nikkei 225 Stock Average slumped 185.49 or 0.9% to 19,285.63 and the broader Topix index decreased 16.04 to 1,552.78.

For the week, Nikkei 225 dropped 1.4%.

The yen closed at 119.46 against a dollar.

Stocks in Review

Idemitsu Kosan Co., Ltd dropped 2.3% to 2,132 yen after the petrochemical company; Kyushu Electric Power Company and Tokyo Gas Co. agreed to develop a coal-fired power plant Chiba Sodegaura Power Co., Ltd in next two month with an estimated cost of 990 million yen.

Milbon Co., Ltd gained 0.1% to 3,645 yen after the hair cosmetics products maker said net sales in the first-quarter ending in March jumped 4.9% to 6.08 billion yen from 5.80 billion yen in a year ago period.

Net income in the quarter soared 26.9% to 635 million yen compared to 500 million yen and earnings per share jumped to 38.79 yen from 30.56 yen in the same period a year ago.

Panasonic Corporation climbed 3.2% to 1,576.50 yen after the electric and electronic appliances maker forecasted sales for the fiscal 2016 to soar to 8 trillion yen and operating profit to surge 23% to 430 billion yen.

The company also plans to invest 1 trillion yen to reach its revenue target of 10 trillion yen by fiscal 2018.

UBIC Inc jumped 2.1% to 972 yen after the forensic services provider revised revenue forecast for the fiscal 2015 ending in March to jump 3.3% to 6.20 billion yen and net income to decline 54.4% to 260 million yen and earnings per share to plunge 7.63 yen from an earlier estimate of 16.74 yen.