Japan's inflation almost dissipates with Dec. core CPI up only 0.2%+

TOKYO, Jan. 30 Kyodo - Japan's key inflation gauge rose 0.2 percent in December from a year earlier, with the pace of price growth increasingly slowing due largely to declining energy costs, the government said Friday.

The core nationwide consumer price index, which excludes volatile fresh food
prices, grew for the 15th consecutive month of increase to 101.1 against the
base of 100 for 2005, the Ministry of Internal Affairs and Communications said
in a preliminary report.
The headline reading marked the smallest gain in 15 months and was slightly
below the average market forecast of a 0.3 percent rise in a Kyodo News survey.
The nation's inflation rate, which had accelerated since late 2007 on rising
commodity prices and peaked last summer, has been almost dying off with
authorities concerned about the economy returning to deflation.
Through 2008, the core index gained 1.5 percent from a year before to 101.6,
affected by sharp rises in oil and food prices during the first half of the
12-month period. The yearly reading was almost flat in 2007 and was up 0.1
percent in 2006.
In December alone, prices of nonperishable foods rose 4.0 percent. The rate of
rise was slower than the 4.4 percent climb in November.
Food prices ''remain at relatively high levels but it appears those prices have
ceased their hikes,'' a ministry official said.
Energy costs declined 6.8 percent year-on-year, the first fall since March 2007
when they slid 0.5 percent, in a clear sign that recent sharp falls in crude
oil prices have muted Japan's inflation.
Prices for heating oil were down 18.6 percent, the first decline in 15 months,
while gasoline prices shed 24.8 percent.
The core CPI for Tokyo's 23 wards in January grew 0.5 percent to 100.5, the
ministry said. That compares with the average projection of a 0.6 percent
increase.
Consumer prices in Tokyo are seen as a leading indicator of prices across Japan.
==Kyodo
2009-01-30 22:57:48