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 Stripping out the effects of a sale tax hike, the nation's core
consumer price index (CPI) - excluding volatile fresh food but
includes oil products - is forecast to have increased 0.3 percent
year-on-year last month, a Reuters poll showed.
Hit by tumbling oil prices, that inflation number is not even
quarter of the way toward meeting the BOJ's goal.
"Core CPI has been on the decline and there is a high possibility
sharp falls in oil prices further push down consumer inflation
toward the middle of this year," said Naoki Iizuka, economist at
Citigroup Global Markets Japan.
On the bright side, factory output is expected to jump in January,
up for a second straight month, and analysts are predicting a
production uptick for a wide range of industries thanks to a
recovery in exports.
The Bank of Japan is counting on exports to help offset the
still-weak private consumption, and for weak oil prices to spur
companies to spend more, helping the economy gather speed after last
April's sales tax hike tipped it into recession.
At this week's policy review, BOJ Governor Haruhiko Kuroda said he
saw no immediate need to ease policy again, stressing that temporary
pressure from slumping oil prices won't derail steady progress
toward reaching the central bank's 2 percent target.
Core CPI, including the effects of the tax-hike, was forecast at an
annual 2.3 percent in January, down from a 2.5 percent rise in
December, according to the poll of 22 economists.
FACTORY OUTPUT RISING
The nation's factory output is seen jumping 2.7 percent in January
from the previous month, the poll showed. In December, output
increased 0.8 percent on-month, after a 0.5 percent fall in
November.
"Broad range of industries are expected to show production expansion
due to recovery in exports and capital spending," said an analyst at
Shinkin Central Bank Research Institute in the survey.
"We expect factory output will continue to stay on a recovery trend
as a pickup in export is spreading."
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Analysts are also keeping an eye on manufacturers' output forecasts
for February and March, which will also be released at the same
time.
The poll found the jobless rate stood at 3.4 percent in January,
unchanged from December and stayed at the lowest level since August
1997. The job availability ratio was probably steady at 1.15,
staying at the highest level seen in March 1992.
Household spending is expected to have fallen 4.1 percent in January
from a year earlier partly due to bad weather, down for a tenth
straight month, the poll showed. And retail sales are set to fall an
annual 1.3 percent last month, down for the first time in seven
months.
Data earlier this month showed the economy rebounded from recession
in the final quarter last year but growth was weaker than expected
as household and corporate spending disappointed, underlying the
challenge premier Shinzo Abe faces in shaking off decades of
stagnation.
The internal affairs ministry will release CPI data at 8:30 a.m. on
Feb.27 (2330 GMT Feb. 26). Jobs related data and household spending
will also be announced at the same time.
The trade ministry will release the production data and retail sales
at 8:50 a.m. on Friday (2350 GMT, Feb. 26).
(Editing by Shri Navaratnam)
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