Japan’s core consumer prices rose at their fastest pace in more than two years in March, raising worries higher energy and food costs could take a heavy toll on households’ purchasing power.
The core consumer price index (CPI), which excludes volatile fresh food prices but includes fuel costs, jumped 0.8% in March from a year earlier, government data showed on Friday.
That matched the median forecast in a Reuters poll and marked the seventh straight month of gains.
“Looking ahead, we believe core CPI inflation is likely to accelerate in April as some of the impact of cuts to mobile phone charges comes full circle,” said Barclays analyst Kazuma Maeda.
“It could reach 2% with a stronger-than-expected pass-through of raw material costs to food items,” he added.
The CPI data will be among factors the Japan’s central bank will scrutinise at its next two-day rate review, which is scheduled to end on Thursday, where it is likely to raise its inflation forecast for this fiscal year to near 2%.
Core consumer price inflation has posted a year-on-year increase every month since September. March’s increase marked the fastest year-on-year rise since January 2020.
Overall, however, the rate of price increases in Japan has remained modest compared with much sharper gains in the United States and other advanced economies, as sluggish wage growth in Japan discourages firms from hiking prices much.
The Bank of Japan has stuck to its massive monetary stimulus as it seeks to have inflation stably hit its 2% target on the back of strong wage growth, despite worries that a weakening yen is driving up import costs of food and energy.
- Reuters, with additional editing by George Russell
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