Core Inflation In Japan's Capital Eases More Than Forecast

(RTTNews) - Core inflation in Japan's capital weakened more-than-expected at the end of the year but it remained firmly above the central bank's 2 percent target, official data revealed on Friday.

Excluding fresh food, Tokyo inflation softened to 2.3 percent in December from 2.8 percent in November, the Ministry of Internal Affairs and Communications reported. The rate was also below economists' forecast of 2.5 percent.

At the same time, inflation excluding fresh food and fuel, slowed to 2.6 percent from 2.8 percent.

Overall, the Tokyo CPI moved up 2.0 percent from the prior year, following November's 2.7 percent gain.

Last week, the Bank of Japan raised its key interest rate by a quarter-point to 0.75 percent, the highest level in three decades, and also hinted at further rate hikes. The BoJ noted that the real interest rates are expected to remain significantly negative after the change in the policy rate.

Elsewhere, the Ministry of Economy, Trade and Industry said Japan's industrial production dropped 2.6 percent on a monthly basis in November, in contrast to the 1.5 percent rise seen in October. Output was forecast to drop 2.0 percent. Year-on-year, industrial production was down 2.1 percent, reversing the 1.6 percent increase in October.

The ministry said, "Industrial Production fluctuates indecisively." The METI forecasts industrial production to grow 1.3 percent in December and 8 percent in January.

Another data from the METI showed that retail sales logged an annual growth of 1.0 percent after rising 1.7 percent in October. Nonetheless, the pace of increase was better than forecast of 0.9 percent. Month-on-month, retail sales growth eased to 0.6 percent from 1.6 percent in the prior month.

In a communique, the Ministry of Internal Affairs and Communications reported that the unemployment rate remained unchanged at seasonally adjusted 2.6 percent in November.

The number of unemployed increased 70,000 from the previous year to 1.71 million.