Japan economy running smoothly

TOKYO - Japanese core consumer prices rose 0.5 per cent in April from a year earlier, data showed today, in line with market expectations and showing a steady recovery from deflation that could fuel speculation of a rise in interest rates in the coming months.

The consensus of analysts for the core consumer price index (CPI), which excludes fresh foods, was for a 0.5 per cent rise.

Core CPI has been rising steadily since October, and the Bank of Japan (BOJ) has said it expects prices to keep rising as demand is beginning to exceed supply on the back of a firmer economy.

A sustained rise in prices would likely prompt the BOJ to consider lifting short-term interest rates from zero, although it has said any rate increase would be gradual.

Data also showed core CPI in the Tokyo area, announced a month before the nationwide figures, was up 0.4 per cent in May from a year earlier.

- REUTERS