[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 31 March 2006, 05:57 GMT 06:57 UK
Inflation boost for Japan economy
A Japanese businessman looks at a board indicating Japan's Nikkei index closed at 17,045.34 points
Confidence in the economy has boosted Japanese stocks recently
Rising inflation in Japan has prompted speculation that interest rates in the country may soon rise from record lows.

Core consumer price inflation (CPI), which excludes food, rose 0.5% in February compared to a year earlier.

Meanwhile, Japan's unemployment rate fell to 4.1% in February from 4.4%, its biggest drop on record.

Experts said the figures underlined hopes that healthy consumer spending will push up prices, leading to a rise in interest rates from almost zero.

"The jobless rate could fall below 4% in March or April, and that could prompt views that growing employment will further push up prices," Naoki Iizuka, chief economist at Dai-ichi Life Research Institute, said.

Improving fortunes

Japan's jobless figure was the lowest rate since 1998.

The Japanese economy has been making a steady recovery over the past year, boosting domestic demand and improving the outlook for exporters.

The Bank of Japan recently announced plans to tighten its longstanding 'ultra-loose' monetary policy, indicative of the economy's improving fortunes.

Further good news is expected when the country's quarterly Tankan business confidence survey is released on Monday - with the report expected to show its fourth improvement in a row.

Improvements in the world's number two economy and its upbeat outlook have pushed stocks on Tokyo's Nikkei to five year highs.

The rise in share prices has come despite a higher-than-expected fall of 1.7% in industrial production for February being announced on Thursday.

"Combined with other economic data we've seen recently, it's safe to say the Japanese economy is maintaining its upward trajectory," said Masaki Fukui, senior market economist at Mizuho Corporate Bank said.




SEE ALSO:
Nikkei index hits five-year high
30 Mar 06 |  Business
Japan delays China loans decision
23 Mar 06 |  Asia-Pacific
Japanese trade back in the black
23 Mar 06 |  Business
Japan tightens monetary strategy
09 Mar 06 |  Business
Japan ponders post-deflation plan
27 Feb 06 |  Business
Fresh boost for Japanese economy
13 Feb 06 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific