Japan's core inflation accelerated in August, industrial output rose more than expected and demand for labour remained at its strongest in over 40 years in a further sign of solid momentum in the world's third-largest economy. Ciara Lee reports.
The world's third-largest economy proving its recovery remains on track. Japanese core inflation accelerated in August Industrial output rose a more than expected 2.1 percent. And demand for labour remained at its strongest in over 40 years. Japan's economy expanded at an annualised 2.5 percent in the second quarter as consumer and company spending picked up. But optimism over growth comes amid political uncertainty after Prime Minister Shinzo Abe's decision to call a snap election. There's also uneasiness about monetary policy after a summary of the Bank of Japan's most recent meeting showed one board member wanting an expansion of stimulus. While some analysts see Japan's massive stimulus programme as failing to address an underlying demographic challenge. (SOUNDBITE) (English) CMC MARKETS ANALYST, MICHAEL HEWSON, SAYING: "You've only got to look at the stats in Japan - more nappies are being sold to the over 70s and 80s than are actually been sold to babies and I think that is a problem. What Japan also needs to do is it needs to liberalize its employment markets because at the moment I think we've got an ageing population. You need a new tax payers to help pay for that social care." Consumer prices also still an issue and a long way from the central bank's 2 percent inflation target. Price and wage growth remain weak with firms still wary of passing more of their profits to employees Politics will for now likely take centre stage ahead of the October 22nd election. The outcome has been thrown into doubt because the largest opposition party has abandoned the election It will now allow its members to run for a newly formed party And that may prove popular with voters.