By Leika Kihara
TOKYO (Reuters) – Japan’s core consumer prices rose for the 11th straight month and household spending jumped in November, offering the central bank some hope a steady economic recovery will gradually drive up inflation to its 2 percent target.
But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other major central banks seek an end to crisis-mode policies.
The nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9 percent in November from a year earlier, government data showed on Tuesday, just ahead of a median market forecast for a 0.8 percent annual rise and October’s 0.8 percent gain.
Core consumer prices in Tokyo, available a month before the nationwide data, were up 0.8 percent in December from a year earlier, faster than a median market forecast for 0.7 percent growth.
Separate government data released on Tuesday showed household spending rose 1.7 percent in November from a year earlier, much higher than market forecasts for a 0.5 percent increase.
Japan’s economy grew an annualized 2.5 percent in July-September to mark a seventh straight quarter of growth thanks to robust exports and capital expenditure.
But the inflation rate remains distant from the BOJ’s 2 percent target, as firms remain wary of scaring away cost-sensitive consumers with price hikes.
The BOJ kept monetary policy steady last week and its governor reassured markets the central bank will lag well behind overseas peers in ending its ultra-loose monetary settings.
(Reporting by Leika Kihara; Editing by Richard Borsuk and Shri Navaratnam)