Japan’s consumer prices for last month rose 3.2 percent from the previous year to the highest level since 1991, the government said yesterday, largely due to a sales tax increase that is expected to dent growth this quarter.
Other data for last month were largely in line with forecasts. Industrial production fell 2.5 percent from the previous year and household spending sank 4.6 percent. Unemployment was 3.6 percent, the same as in March.
Last month, Japan raised its sales tax to 8 percent from 5 percent. The Bank of Japan (BOJ) estimates that 1.7 percentage points of the inflation rate last month could be attributed to the tax hike. The 3.2 percent figure is for the core consumer price index, which excludes fresh food.
RECOVERY AT RISK
In its latest assessment of Japan’s recovery, the IMF said yesterday that Japan appeared to be weathering the sales tax increase and exports are expected to begin picking up as demand overseas rebounds.
It forecast that inflation would remain modest at 1.1 percent this year, but it cautioned that Japan needs deep, structural reforms to support growth.
“Near-term risks to the outlook are balanced, but the sustainability of the recovery over the medium term is at risk,” the IMF said.
The Bank of Japan may need to keep up its stimulus drive for an “extended period,” it said.
Fears that a recent sales tax rise would dent a recovery in the world’s No. 3 economy have boosted speculation that the Bank of Japan would be forced to expand its monetary easing campaign to counter any downturn.
The Washington-based IMF said that the bank’s target to reach 2 percent inflation by next year — aimed at conquering years of falling prices which held back growth — would most likely be reached by 2017 instead.
QUICK ACTION
“The BOJ should act quickly if actual or expected inflation stagnates or growth disappoints,” the IMF said in its annual review of Japan’s economy. “The current aggressive pace of monetary easing may need to be maintained for an extended period.”
Economists say wage increases are needed to ensure the strong consumer demand that would prompt companies to begin investing more for future growth.
Shortages of labor in some areas, such as construction and trucking, have been pushing prices and, to a limited extent, wages higher, but so far overall incomes have not kept pace with the tax hike and price increases.
Prices in Japan rose partly due to higher costs for energy as the yen weakened against the US dollar because of massive monetary easing. Many businesses raised prices or offered less for the same price to compensate for their own higher costs.
CRUCIAL DEMAND
Revving up consumer demand through stronger purchasing power will be crucial, said Stephan Danninger, Asia and Pacific division chief for the IMF.
“The need for inflation to be meaningful in contributing to a stable and faster growing economy is through demand, and not through the input of higher prices,” Danninger told a seminar in Tokyo yesterday.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained