TOKYO: Tokyo consumer prices fell unexpectedly in April due to cuts in mobile phone fees by major carriers, government data showed on Friday (Apr 30), making the central bank's 2 per cent inflation target appear even more elusive.
Major carriers have come under intense pressure from Prime Minister Yoshihide Suga, who has called for mobile phone fees to drop by as much as 40 per cent, arguing that Japan's mobile phone fees, among the world's most expensive, were straining households.
While lower mobile phone fees may help boost household income and stimulate consumption, they are also exerting downward pressure on prices, rekindling worries about a return to deflation.
The core consumer price index (CPI) for Japan's capital, which excludes fresh food but includes oil products, fell 0.2 per cent year-on-year in April. That compared with a 0.1 per cent fall in the prior month and a flat reading seen by economists in a Reuters poll.
Market players were closely watching the Tokyo-area CPI, which is available a month before nationwide figures, as a leading price indicator for clues on the impact of cheaper cellphone fees on inflation.
Masaki Kuwahara, senior economist at Nomura Securities, expected new mobile phone fees, as well as other discounts on mobile phone charges, to weigh on broader core CPI by around 0.4 percentage point.
In April, communications prices, including mobile phone charges, fell 26.5 per cent, knocking 0.44 percentage point off the Tokyo CPI and offsetting slower declines in energy costs, the internal ministry data showed.