Japan prices rise ahead of tax increase

New data released in Japan shows consumer spending rose for the ninth month in a row during February, with a 1.3 per cent increase recorded.

Prime minister Shinzo Abe's inflation target of two per cent was therefore missed, but the figure came in broadly with the expectations of analysts ahead of the release of the statistics.

Japanese consumer spending also slowed, while Japan's jobless rate fell to 3.6 per cent, which is the lowest it has stood at for the last six years.

Investors are keeping a close eye on the Japanese economy at the present time due to the fact a tax rise is scheduled to take place in the Asian nation next month.

"Consumer spending was sluggish in February, but the real surge ahead of next month`s consumption tax hike will only show up in the March figures," said London-based Capital Economics.

Sales data

Retail sales were revealed by the new batch of official statistics to be up 3.6 per cent in February from a year earlier, while household spending dropped by a surprising 2.5 per cent. Consumer prices were 1.3 per cent higher on-year in February – which was the same rate as that released for December and January – when volatile fresh food prices are stripped out of the data.

Hamagin Research Institute economist Yuki Endo added that the latest jobs figures released by Japan "represent companies' strong demand for workers on the back of the recent positive economic momentum". He noted this trend is also likely to continue for the time being.

"But you can't conclude Japan`s spending trend is weak by just looking at the (household spending) figure because this data are known as volatile," Mr Endo told Dow Jones Newswires.

Earlier in the month, Japan made headlines all over the world after its government confirmed the nation will not be recognising Bitcoin as a currency. The virtual currency has been embraced by some countries, but others – including China and Russia – remain suspicious of its usage.

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