Inflation set to rebound, but not enough for BoJ

Underlying price pressures in Japan are not quite as weak as the recent negative reading for core inflation might suggest: it was caused by a slump in mobile phone prices that won’t continue. But while we expect a rebound in inflation over coming months, we think this too will be amplified by temporary factors. Stripping these out, inflation looks likely to settle at around 0.5% – well below the Bank of Japan’s 2% target.