Japan’s inflation last month hit its fastest clip in 40 years, an outcome that further stretches the credibility of the Bank of Japan’s (BOJ) view that continued stimulus is needed to secure stable price growth.
Consumer prices excluding fresh food climbed 3.6 percent from a year earlier, the Japanese Ministry of Internal Affairs and Communications said yesterday.
The reading outpaced a 3.5 percent forecast by analysts and marks the fastest price growth since 1982. Core inflation has now exceeded the central bank’s 2 percent price target for seven straight months, with the yen’s historic fall amplifying the trend.
Photo: Bloomberg
Following the release, BOJ Governor Haruhiko Kuroda reiterated his view that the central bank’s ultra-low interest rates remain appropriate, although he added that the latest gains were significant and inflation could accelerate further.
While economists largely agree with the BOJ that inflation would cool in Japan next year, partly as a result of government subsidies, some analysts see the central bank underestimating the underlying strength of prices.
“It’s getting harder for the BOJ to keep saying that the current cost-push inflation is temporary,” Daiwa Securities Co chief market economist Mari Iwashita said. “If the yen remains weak, more companies will try to pass on costs to consumers.”
Photo: REUTERS
The BOJ remains the outlier among major central banks. While its peers have long since given up the view that hot prices are merely transitory, and have aggressively raised borrowing costs, Kuroda has stuck resolutely with rock-bottom interest rates.
That stance has helped drive the yen to 32-year lows against the US dollar, prompting repeated government intervention in currency markets.
Kuroda has consistently said that the current inflation is unsustainable and driven by import costs and the weaker currency, as he looks to keep policy on hold during the final months of his leadership.
“I believe price growth will fall below 2 percent next fiscal year onward,” Kuroda yesterday told parliament.
The latest data show that price rises are continuing to spread beyond energy costs.
Gains in processed food costs now outweigh the impact of elevated power and fuel prices, the report showed.
Excluding fresh food and energy, price growth has reached 2.5 percent, an indication that the strength of the inflation trend is firmly beyond 2 percent.
Last month, companies raised the prices of about 6,700 food items, ranging from mayonnaise to beverages, a Teikoku Databank survey showed.
Although the trend appears to have peaked last month, the prices of another 833 food items, including dairy products, are expected to increase this month.
To ease the hit of higher prices on consumption, Japanese Prime Minister Fumio Kishida last month ordered an economic stimulus package that includes aid to reduce energy costs and cash handouts for childcare.
His Cabinet has approved an extra budget of ¥29.1 trillion (US$207.7 billion) to partly fund these measures.
Bloomberg economist Yuki Masujima said that the government “is putting no pressure on the BOJ to pivot. It prefers to keep interest rates ultra-low to finance its debt, including the new borrowing required by its latest stimulus package.”
Kuroda, whose term finishes in April next year, has singled out wage growth as the key factor needed to create an environment of lasting growth in prices and the economy.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”