UPDATE 1-Consumer prices in Tokyo tumble as lower cell phone costs drag inflation down

(Add details on cell phone charges, background on deflation)

* Tokyo CPI -0.2% y / y in April vs forecast stable reading

* Carriers under pressure from PM to cut mobile phone costs

* Slow CPI lowers hopes that BOJ will hit 2% inflation

TOKYO, April 30 (Reuters) – Consumer prices in Tokyo unexpectedly fell in April due to cuts in mobile phone charges by major carriers, government data showed on Friday, making the target of even more elusive central bank 2% inflation.

Major carriers have come under intense pressure from Prime Minister Yoshihide Suga, who has called for mobile phone charges to be cut by up to 40%, claiming that mobile phone charges in Japan are among the most expensive in the world. , put a strain on households.

While lower cell phone prices may help raise household incomes and stimulate consumption, it also puts downward pressure on prices, rekindling fears of a return to deflation.

The core consumer price index (CPI) for the Japanese capital, which excludes fresh food but includes petroleum products, fell 0.2% year-over-year in April. That is compared to a decline of 0.1% the month before and a stable reading seen by economists in a Reuters poll.

Market participants were closely watching the Tokyo region CPI, which is available a month ahead of national figures, as a leading price indicator for clues about the impact of cheaper mobile phone charges on the market. ‘inflation.

Masaki Kuwahara, senior economist at Nomura Securities, expected the new cell phone charges, along with other discounts on mobile phone charges, to weigh on the broader core CPI by around 0.4 % point.

In April, prices for communications, including cell phone charges, fell 26.5%, pushing Tokyo’s CPI down 0.44% and offsetting slower decline in energy costs, according to internal ministry data.

Separately, in a full version of its quarterly report released on Wednesday, the Bank of Japan said low-cost mobile phone plans from major carriers – which became available from mid-March 2021 – would lead to a further decline. deeper in prices in the summer and subsequent months when CPI data is updated. (Reporting by Tetsushi Kajimoto; additional reporting by Kentaro Sugiyama; editing by Richard Pullin)

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