Other April data for the world's third-largest economy were largely in line with forecasts. Industrial production fell 2.5 percent from a year earlier and household spending sank 4.6 percent. Unemployment was 3.6 percent, the same as in March.
Japan raised its sales tax to 8 percent in April from 5 percent. The country’s central bank estimates that 1.7 percentage points of the inflation rate in April could be attributed to the tax hike. The 3.2 percent figure is for the core consumer price index, which excludes fresh food.
Prime Minister Shinzo Abe's policies aimed at ending a deflationary slump that has slowed growth for nearly two decades have made some headway, though the inflation rate remains well below the 2 percent target set by the central bank and government when the tax hike is factored out.
Consumers and businesses ramped up spending ahead of the increase, boosting demand temporarily. The economy is expected to contract or at least slow sharply this quarter.
Economists say a sustained recovery will hinge on strong consumer demand, and that requires wage increases to catch up with the higher prices.
Shortages of labor in some areas, such as construction and trucking, have been pushing prices and to a limited extent wages higher. But so far overall incomes have not kept pace with the tax hike and price increases.
By Ruchi Singh
reporter
Park Sae-jin
swatchsjp@ajunews.com
