Tokyo (AFP) – Japanese inflation was stagnant in May, government data indicated Friday, and still far below target as the Bank of Japan shows little sign of winning its long battle against deflation.
Prices in the world’s third-largest economy rose by 0.7 percent year-on-year in May, the same level as the previous month and in line with market expectations.
The country’s central bank and government had set an inflation rate of 2.0 percent as the target to boost the economy but the Bank of Japan last month quietly dropped the goal.
With fresh food and energy stripped out, prices rose by even less — just 0.3 percent in May, the ministry said.
Japan has battled deflation for many years and the central bank’s ultra-loose monetary policy appears to be having limited impact.
The Bank of Japan has signalled it has no plans to drop its policy, despite tightening moves in other major economies.
The latest data comes as Japan’s economy slid into reverse for the first time in two years at the beginning of 2018, hit by sluggish consumption and a winter cold snap.
The economy contracted by 0.2 percent quarter-on-quarter in the January-March period, compared with growth of 0.1 percent at the end of 2017.
That brought to an end a series of eight consecutive quarters of growth, a winning streak not seen since the heady days of the “miracle” boom of the 1980s when the Japanese economy ruled the world.