Japan's jobless rate rises as inflation hits decade high
TOKYO (AFP) — Japan said Friday its unemployment rate rose for the first time in five months as core inflation hit the fastest pace in a decade, adding to concerns about the health of Asia's largest economy.
The jobless rate rose by 0.1 percentage points to 3.9 percent in February from the previous month, the government reported, missing market forecasts for a steady rate of 3.8 percent.
Japan's core inflation rate meanwhile accelerated to a year-on-year rate of 1.0 percent in February, the quickest pace since March 1998, as rising energy and food costs drove up consumer prices, a separate report showed.
Core inflation, which excludes volatile fresh food prices, picked up from a pace of 0.8 percent in January.
It was the fifth straight monthly rise in core consumer prices. Market forecasts, on average, had been for inflation of 0.9 percent in February.
March prices in Tokyo, a leading indicator of nationwide trends released a month earlier than the figures for the whole of Japan, rose 0.6 percent.
The world's second-largest economy has struggled for the past decade to put a decisive end to deflation, which weighed on growth by undermining corporate profits and giving consumers an incentive to wait to spend their money.
But analysts warn that the return of inflation is not altogether good news for Japan since it is largely due to soaring prices in oil, raw materials and food, making life tougher for companies and consumers.
Even so, markets see little chance of an interest rate hike any time soon by Japan's central bank to try to contain price pressures given worries about the health of the global economy and financial markets.
Although consumer prices are rising, wages remain sluggish due to meagre pay rises and as younger workers replace retiring baby boomers.
Japanese household spending was flat in February as average incomes dipped 0.1 percent, the government said.
The sluggish results defied analysts forecasts of a rise of 2.5 percent in household spending, following a 3.6 percent rise in January.
Retail sales rose 3.1 percent in February from a year ago, but that was at least partly due to the effect of higher gasoline prices, the government said.
Japan's economy is gradually recovering from a slump stretching back over a decade, but the sluggish consumer spending has caused concern that the country's export-led growth is vulnerable to a global economic slowdown.
Japanese share prices opened lower in the wake of the data, with the benchmark Nikkei-225 index down 0.25 percent in early trade, weighed down by overnight losses on Wall Street.