By Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s core consumer prices stopped falling for the first time in just over a year in August, government data showed, a source of solace for the central bank struggling to accelerate inflation towards its elusive 2% target.

According to the Ministry of Internal Affairs and Communications, core consumer prices in Japan were flat for August as a result of the tug of war between higher energy costs and cheaper mobile phone charges.

This was in line with the expected flat reading by economists following a decrease of 0.2% in July.

This was the first positive core CPI reading since July 2020. It happened because of weak consumer spending, which discouraged companies from passing on material costs to customers.

Core-core inflation, which does not include food or energy, dropped 0.5% from last year.

Haruhikokuroda, Bank of Japan Governor has stated that, except for special factors like mobile phone charges and a base-year change in core CPI which includes fresh foods, but does not include oil prices, consumer prices remain in a positive area.

Kuroda maintained that the price trend was stable, and that inflation would accelerate with an improvement in output and rising inflation expectations. But inflation is not likely to exceed 2% before Kuroda ends his five-year term. Kuroda will be leaving office in 2023.

This means that the central bank is likely to continue to provide massive monetary stimuli for the near future, even if there are concerns about the negative side effects of low rates and a loss in profits.

Core consumer inflation could be affected by a CPI change that adds a higher weighting to mobile fees. Friday’s data showed that. The August record mobile phone fee plunge was 44.8%.

At its two-day rate review, which ended Wednesday, the BOJ maintained its target for short-term interest rates at -0.1%. It also kept its 10-year yield target of 0%.