Japan’s consumer prices rose 4 percent last month from a year earlier, a level not seen since December 1981, fueled in part by higher energy bills, government data showed yesterday.
The acceleration came after a 3.7 percent increase in prices in November last year, and the data from the Japanese Ministry of Internal Affairs and Communications showed inflation for last year stood at 2.3 percent.
The figures were released days after the Bank of Japan again opted to leave its ultra-easy monetary policy intact, bucking the trend set by other central banks that have hiked rates to tackle rising prices.
Photo: Reuters
Last month’s figure was well below the still sky-high levels that have sparked concern in the US, the UK and elsewhere, but it far exceeds the Japanese central bank’s longstanding inflation goal of 2 percent.
Excluding volatile fresh food and energy prices, the figure for last month was 3 percent.
Rises in electricity and gas bills, as well as telecommunication fees and price hikes for a range of processed foods contributed to last month’s acceleration, the data showed.
However, the central bank has consistently said it believes the price increases seen over the last year are temporary and linked to exceptional events such as the Russian invasion of Ukraine and spiking energy costs.
The Bank of Japan is reluctant to end its easing program without clear signs that price rises are likely to be sustained, including rising wages.
The spring season is the period when corporate Japan traditionally faces requests for wage increases, and the government has urged companies to hike persistently stagnant salaries.
On Wednesday, the central bank said it expected inflation to hit 3 percent for last fiscal year, up from the 2.9 percent it predicted in October.
However, it forecast inflation of only 1.6 percent for the following year, rising to 1.8 percent for next fiscal year.
Gas and electricity subsidies should start to bring down headline inflation, but the central bank would stay under pressure to address rising prices, Capital Economics Ltd economist Darren Tay said.
“We are not anticipating a full abandonment of the yield curve control at the bank’s April meeting,” he wrote, referring to the limits the institution has maintained on the fluctuations of rates for 10-year government bonds.
“But as the peak in underlying inflation will coincide with a recession both inside and outside Japan, we don’t expect the Bank of Japan to raise its policy rate,” he added.
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