Core consumer inflation in Japan's capital Tokyo slowed in March for a second month but remained well above the central bank's 2% target, data showed on Friday, highlighting broadening price pressures in the world's third-largest economy.
A separate index stripping away energy prices rose at the fastest year-on-year pace since 1990, a sign the effect of government subsidies to curb utility bills did little to stem the rising cost of living for households.
"With export volumes on track to record the sharpest contraction since the initial outbreak of the pandemic, we still consider it more likely than not that GDP will have contracted in the first quarter and we think it will do again in Q2," said Marcel Thieliant, head of Asia-Pacific at Capital Economics.
An index for Tokyo stripping away fresh food and energy prices, which is closely watched by the BOJ as a gauge of demand-side price pressures, was 3.4% higher in March than a year earlier and faster than a 3.1% rise in February. Separately, factory output rose 4.5% in February from January, better than a forecast 2.7% gain and rebounding from a revised 5.3% drop in January, on easing supply bottlenecks for carmakers.
Japan's economy is finally recovering from the scars of the COVID-19 pandemic after a delay, though risks of a global slowdown and rising food prices hang over the outlook for exports and consumption.
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