Japan’s Consumer Prices Decline Before BOJ’s Policy Decision

Japan’s consumer prices dropped for a fourth consecutive month, showing how far prices are from the Bank of Japan’s 2 percent inflation target. In a slew of key economic indicators for June released just hours before the BOJ announces any changes in monetary policy, household spending slumped while industrial production rose more than economists forecast. This rounds out most of the key data for the month.

The closely watched consumer price gauge increases pressure on central bank Governor Haruhiko Kuroda and policy board members to consider further expansion of stimulus to meet their price target. Households are reluctant to increase spending given little prospect of wage hikes while the yen’s gains this year are putting pressure on exports, crimping corporate profits and discouraging investment. Industrial production was a bright spot with 13 industries of 15 measured showing gains. The chemical industry, excluding drugs, was the biggest contributor.