Japan inflation seen slowing, rocky path to BOJ target
TOKYO (Reuters) - Japan's annual core consumer inflation probably slowed for a fourth straight month in November, mirroring a slide in oil prices, a Reuters poll showed, underscoring a tough task for the Bank of Japan to achieve its 2 percent inflation target.
Factory output is expected to have risen for a third straight month last month but the pace will only be moderate as inventories are still high.
"Consumer spending lacks strength and prices of items such as home appliances, which attracted large demand before a sales tax hike, remain weak," said an economist at Shinkin Central Bank Research Institute in the survey.
"Upward pressure on energy-related prices such as gasoline and electricity has been weakening. The annual consumer inflation rate will likely continue to slow down going ahead."
The core consume price index (CPI), which excludes volatile fresh food but includes oil products, probably rose 2.7 percent in November from a year earlier, the poll of 24 economists showed, following a 2.9 percent rise in October and a 3.0 percent gain in September.
Stripping out the effects of April's tax hike, consumer inflation was estimated at 0.7 percent, far below the central bank's 2 percent price stability target.
The internal affairs ministry will announce CPI at 8:30 a.m. on Dec. 26 (2330 GMT Dec. 25).
Many analysts remain doubtful that the Bank of Japan will achieve its 2 percent inflation target during the next fiscal year starting from April 2015.
But its governor Haruhiko Kuroda on Friday stressed that Japan was on track to hit the central bank's price goal, shrugging off speculation that a recent plunge in oil prices would weigh on consumer prices and force him to ease policy again early next year.
The nation's industrial output, which will be released shortly after CPI, is expected to have risen 0.8 percent in November, up for a third straight month, the poll showed.
"Recovery in factory production lacks momentum as an inventory adjustment still continues in the transport equipment sector. But we expect gains in broad sectors such as information and communication electronic equipment," said an economist at the Japan Research Institute.
The trade ministry will release industrial output at 8:50 a.m. on Friday.
Japan's jobless rate probably stayed steady at 3.5 percent in November and the availability of jobs will also likely be unchanged at 1.10 from the previous month, the poll showed.
Household spending in November probably slipped 3.8 percent from a year earlier, down for an eight straight month, according to the poll, indicating the sales tax hike continued weigh on consumer spending.
Both labour market data and household spending will be released at the same time with CPI data.
Another spending related data, retail sales for November is expected to show an annual 1.1 percent gain, slowing from a 1.4 percent rise in October and a 2.3 percent increase in September.
The BOJ maintained its massive monetary stimulus on Friday and offered a brighter view of the economy to say that it continues to recover moderately with the pain from the sales tax hike in April subsiding.
Analysts expect the world third-largest economy to rebound in October-December after two straight quarterly contractions but growth will probably fall this fiscal year to March 2015.
(Editing by Jacqueline Wong)
