Japan just joined Britain in the "noflation" club

 
Jessica Morris
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Core consumer inflation in Japan stalled in February, meaning it has joined now Britain in the "noflation" club.

The government said that its key inflation gauge, which strips out the effect of last year's sales tax hike, was flat from a year earlier. This means it has moved further away from the Bank of Japan's target of two per cent.

Headline inflation - which includes oil prices but strips out fresh food - rose two per cent in the year to February. But this was just below economists' expectations, with the majority forecasting a rise of 2.1 per cent.

Today's figure represents a setback for prime minister Shinz┼Ź Abe's "Abenomics" programme which is a set of economic policies designed to lift Japan out a prolonged period of low growth and deflation.

It shows that households have been pricing in the impact of last year's controversial sales tax hike, which rose from five per cent to eight per cent in April, and was widely expected to curtail consumer spending.

The Bank of Japan is now widely expected to provide the economy with another small dose of quantitative easing, in a bid to prop up future inflation expectations.

Earlier this week falling global oil prices pushed Britain's inflation rate to zero for the first time since the 1960s,

However, this was widely applauded, with many economists saying it will provide consumers with a tax-break, minus any negative drags on growth.

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