2018.02.2302:58:00UTC+00Japan Inflation Remains Subdued in January

Japan's core consumer inflation was stagnant in January from the previous year in an indication that a strengthening economy has yet to prompt companies to raise prices, a challenge policy makers have yet to overcome despite years of massive stimulus.

The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, increased 0.9 percent in January from the previous year, data showed.

An index excluding the effect of fresh food and energy - closely watched by the Bank of Japan as a measurement of demand-driven price growth - saw inflation accelerate to 0.4 percent in January from 0.3 percent in the previous month.

Subdued inflation has forced the BOJ to maintain ultra-loose policy even as the economic recovery gathers momentum, suggesting it will fall behind its global peers in dialing back its crisis-era stimulus.

Annual overall consumer inflation, which includes volatile fresh food costs, accelerated to 1.4 percent in January from 1.0 percent in December. That was the highest level since July 2014, when stripping away the effect of a 2014 sales tax hike.

The economy of Japan grew at an annualized 0.5 percent in October-December, posting its longest continuous expansion since the 1980s boom, due to strong capital spending.

However, inflation remains distant from the BOJ's 2 percent target as companies hold off on raising prices and wages, citing uncertainty over the economic outlook.

Prime Minister Shinzo Abe has been pushing companies to increase wages by 3 percent or more to fuel consumer spending, piling pressure on firms to spend their huge cash pile to broaden the benefits of the strengthening economy.