Japan's Abe to delay sales tax hike: Nikkei

Japanese Prime Minister Shinzo Abe attends a meeting with Russian President Vladimir Putin in Sochi, Russia, May 6, 2016. REUTERS/Pavel Golovkin/Pool

TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe has decided to delay a sales tax hike set for next April as it would threaten the nation’s efforts to beat prolonged deflation, the Nikkei business daily reported on Saturday.

Abe is expected to announce the delay after further consideration, including talks with fellow Group of Seven leaders at a summit in western Japan on May 26 and 27, the paper reported.

The premier does not intend to dissolve parliament’s lower house and call a snap election on the same day as an upper house poll due in July, according to the Nikkei report.

Economists were betting Abe would delay a rise in the tax to 10 percent from 8 percent, given weak consumption, limp wage growth and a stronger yen.

Analysts will focus on Japan’s economic growth data for January-March, due out on May 18, to gauge the status of the economy.

The proposed tax has been seen by fiscal hawks as needed to curb bulging public debt and pay for huge social security costs.

Abe will hold a news conference June 1 following the close of the current legislative session. The Nikkei said government and ruling coalition officials see this as a possible opportunity to announce his decision.

Reporting by Sruthi Shankar in Bengaluru and Kaori Kaneko in Tokyo; Editing by Richard Borsuk