TOKYO (Reuters) – The Bank of Japan will place emphasis on core consumer inflation projections to include the effects from a planned sales tax hike in October, the business daily reported on Thursday.
Previously, the BOJ focused on core consumer inflation excluding the effects of the tax increase because the central bank considered it as a special factor, the report said.
But policymakers view the effects from the tax hike will likely be offset by government measures such as free education, the Nikkei said.
The BOJ’s shift on projections of core consumer prices, which includes oil products but excludes volatile fresh food costs, will start from April when it releases its outlook report, it said.
The central bank’s core CPI forecasts will likely be boosted by up to 0.2 percentage point, the Nikkei said.
In its outlook report issued last month, the BOJ cut its forecast for core CPI to 0.9 percent in fiscal 2019 starting April, from 1.4 percent forecast in October, reflecting slumping oil prices.
The central bank also trimmed core CPI view for fiscal 2020 to 1.4 percent from 1.5 percent.
The BOJ estimates the sales tax hike will boost core CPI by 0.5 percentage point for fiscal 2019 and fiscal 2020 and free education measures would subtract 0.3 percentage point and 0.4 percentage point respectively.
Latest data showed Japan’s core CPI rose 0.7 percent in December from a year earlier.
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