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Japan's Inflation Lowest In More Than 2 Years

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Japan's inflation eased to the lowest level in more than two years in September, raising pressure on the central bank to ease policy further, data showed Friday.

Excluding fresh food, inflation eased to 0.3 percent in September from 0.5 percent a month ago, the statistics bureau reported. This was the lowest since April 2017 and in line with expectations.

Likewise, excluding fresh food and energy, consumer prices gained 0.5 percent, slower than the 0.6 percent increase logged in August and matched economists' expectations.

Headline inflation slowed marginally to 0.2 percent from 0.3 percent in August. On a monthly basis, consumer prices remained flat in September.

Marcel Thieliant, an economist at Capital Economics, said underlying inflation is set to fall towards zero next year, which will increase the pressure on the Bank of Japan to provide additional stimulus, though concerns about financial stability will probably prevent a cut in policy rates.

The economist said the consumption tax hike on October 1 will muddy the waters. Headline inflation is forecast to rise to 0.6 percent in October.
In July, the central bank had forecast 1 percent inflation for fiscal 2019 and 1.3 percent for the fiscal 2020.

BoJ Governor Haruhiko Kuroda last month repeated that the bank will not hesitate to take additional easing measures if needed to maintain the momentum towards achieving the 2 percent price stability target.

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