November 20, 2015 / 6:36 AM / in 3 years

BOJ to publish new indicators showing prices rising

A man walks past the Bank of Japan (BOJ) building in Tokyo, June 24, 2015. REUTERS/Toru Hanai

TOKYO (Reuters) - The Bank of Japan will release a new set of price indicators this month that reconfigures the way price trends are measured as the central bank seeks to show the country’s below-target inflation rate is due to volatile items such as energy.

Importantly, a new consumer price index (CPI) will exclude energy costs, which have been falling, but include the costs of items such as processed and imported foods, which have been rising.

The BOJ currently uses the government’s core CPI, which excludes fresh food but includes energy costs, as its key price measurement in guiding monetary policy.

With core CPI now slipping due largely to slumping oil prices, the central bank began internally calculating a new index that conveniently shows inflation exceeding 1 percent in the past few months. That index strips away volatile fresh food and energy costs, but includes processed and imported food prices, which are rising.

The BOJ said on Friday it will start publishing this month the new CPI, as well as other indicators such as one showing the ratio of goods seeing prices rise versus those that are falling, on a regular basis each month.

“The performance of the government’s core CPI (in tracking broad price trends) seems to be deteriorating, although this is probably because of the temporary effect of large swings in crude oil prices,” the BOJ said in a research paper.

The BOJ’s new indicators will be released on the day the government’s CPI figures are published. The upcoming release of the CPI and BOJ indicators is on Nov. 27.

Government data showed core consumer prices fell 0.1 percent in the year to September, a second straight month of declines, keeping inflation distant from the BOJ’s 2 percent target.

Reporting by Leika Kihara and Yoshifumi Takemoto; Editing by Sam Holmes

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