TOKYO – Japan inched back into deflationary territory in August as lower oil prices pulled core inflation excluding volatile food prices lower.
The core consumer price index slipped 0.1 percent after remaining flat in July. The "headline" inflation rate, which includes both food and energy data, was flat at 0.2 percent.
It was the first time the core inflation measure had dipped lower since the central bank launched massive asset purchases that are pumping 80 trillion yen ($670 billion) a year into the economy in a bid to push prices higher.
With oil prices below $50 a barrel, upward pressure on prices has eased, hindering those efforts. The government has made achieving an inflation rate of about 2 percent a key aim of its strategy for forcing the world's third-largest economy out of the deflationary doldrums that it says is stifling growth.
Excluding both energy and food prices, the price index rose 0.8 percent in August, compared with 0.6 percent in the previous two months.
Theoretically, expectations of higher inflation would lead families and businesses to step up spending to beat price increases. But companies have used massive cash piles accumulated thanks to record profits to invest overseas while consumers have remained relatively frugal.
Prime Minister Shinzo Abe announced Thursday an update of his economic policies, setting a target for a 600 trillion yen ($5 trillion) economy. The plan focused mainly on promises of improved social welfare policies to help alleviate the burden of child and elder care and encourage a higher birth rate.