The government on Tuesday retained its monthly assessment that the Japanese economy is “picking up moderately” despite some weakness while changing its wording on wholesale prices for the first time in about a year to reflect slower price growth.
In the economic report for February, the Cabinet Office maintained its assessments of 11 key components of the economy, ranging from private consumption and corporate spending to production and exports.
Corporate goods prices “are rising at a slower pace recently,” the report said, a change from the previous month’s expression that they are “rising.” The last time the Cabinet Office modified its wording on the segment was in March 2022.
Wholesale prices “remain at high levels compared with a year earlier but are flat from the previous month,” a government official said.
The prices of goods traded between companies tend not to affect consumer prices immediately, and economists expect consumer inflation to remain at high levels for some time. The office said consumer prices are “rising,” leaving its wording unchanged from January.
The report came after data released last week showed Japan’s economy rebounded in the October-December quarter but lacked strength, with gross domestic product increasing an annualized real 0.6%.
The Cabinet Office had downgraded its assessment of the overall economy in January for the first time in 11 months, saying it was “picking up moderately, although some weaknesses have been seen recently” due to a drop in exports caused by surging COVID-19 cases in China.
Despite broadening price hikes hurting household sentiment, the office said private consumption “is picking up moderately,” helped by a recovery in service demand that was depressed amid the COVID-19 pandemic. Corporate investment, another key component of domestic demand, is “picking up,” it added.
Monetary tightening by the Federal Reserve and other central banks has fueled recession fears, though recent U.S. data have shown the world’s largest economy remains resilient. Economists expect slower growth for China, a major trading partner for Japan.
“Exports have been on a weakening trend recently,” the report said.
Source : Japantimes