Japan's core consumer prices rose in 2013 from a year earlier, marking the first increase in five years, with the reading for December rising at a rate not seen in five years, in a sign the nation is emerging from the doldrums of decades of deflation, a government report said Friday.
The core consumer price index, excluding fresh foods, stood at 100.1 against the 2010 base of 100, the Ministry of Internal Affairs and Communications said, adding that prices had risen 1.3 percent in December from a year ago, beating median market forecasts for a 1.2 percent rise.
The reading in the recording period follows a 1.2 percent rise lodged in November and was the quickest annual increase logged since October 2008, the government said.
With Japan's CPI for the year gaining 0.4 percent in 2013 from a year earlier, with rising energy prices supporting the gains, the Bank of Japan (BOJ) will likely curb additional monetary easing as they approach their 2 percent inflation target in two years, analysts said.
Local analysts here, including Junko Nishioka, chief economist at RBS Securities, said that the reading came in stronger than expected and noted that the prices for durable goods were moving in a positive direction, with consumer prices more than likely to continue on a steady upward trajectory.
Nishioka, as seems to be the consensus among leading economists here, said that Japan's central bank, based on the positive data, would unlikely unroll any additional stimulus measures as the macro-economic environment has turned positive.
Japan's consumer prices were given a boost initially when the central bank rolled out large-scale monetary easing initiatives in April last year, involving huge purchases of government bonds, a sizable expansion of the monetary base, which has seen prices rise since June, as the BOJ zones-in on its 2 percent inflation target.
Prices in Tokyo's 23 wards, often regarded as barometer for future moves nationwide, gained 0.7 percent to 99.0 in January, according to preliminary data also release Friday, in a promising sign for the central bank about upcoming price moves.
Ahead of a consumption tax hike from 5 to 8 percent in April, Japan's industrial output rose 1.1 percent in December, separate government data showed Friday, slightly lower than median forecasts for a 1.2 percent rise in the recording month, as strengthening domestic demand offset mediocre exports to emerging economies.
The Ministry of Economy, Trade and Industry said it predicts that factory output here will rise 6.1 percent in January and increase by 0.3 percent in February, as a weakening yen boosts demand for Japanese manufactured goods in overseas markets and domestic demand ahead of the tax hike remains robust.
Leading economists said that the central bank passing the halfway mark toward achieving its 2 percent inflation target was an encouraging sign for the bank who has been under pressure from Prime Minister Shinzo Abe and the Finance Ministry to do all it can to reverse Japan's nearly two decades of deflation and general economic malaise.
Despite some analysts and the International Monetary Fund (IMF) believing that Japan may hit its inflation goal later that it expects, BOJ Governor Haruhiko Kuroda is confident that prices will hit the bank's target within the timeframe, originally set by the bank last April.
Additional data released Friday also showed that the nation's average monthly household spending rose an inflation-adjusted 0.7 percent in December from a year earlier, marking the fourth straight monthly increase, and attributed the increase in spending to the upcoming tax hike.