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Japan Consumer Prices Soar at Fastest Pace in Seven Years

The gain was much stronger than a 0.8% year-on-year rise in March, as the impact of mobile phone fee cuts fades


Core consumer prices rose 2.1% in May from a year earlier, government data showed on Friday, topping the Japanese inflation target for the second straight month.
The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 2.1% annual gain. File photo: AFP.

 

Japan’s core consumer inflation reached its highest level in more than seven years due to rises in energy and commodity costs, reflecting further pressure on the country’s households.

The consumer price index (CPI), which excludes volatile fresh food costs but includes energy, rose 2.1% in April from a year earlier, government data showed on Friday.

It was the fastest monthly rise since March 2015 and matched the median forecast in a Reuters poll.

The rise in consumer prices is making it harder for the Bank of Japan (BOJ) to convince markets it will keep monetary policy ultra-loose and as the gains fuel public concerns about pushing up living costs.

The gain was much stronger than a 0.8% year-on-year rise in March, as the impact of mobile phone fee cuts from April last year that have pulled down overall CPI since then starts to fade from yearly comparisons.

The overall rate of price increases in Japan has remained modest compared with much sharper rises in the United States and other advanced economies, as sluggish wage growth in the world’s third-largest economy makes it harder for firms to raise prices.

The BOJ has retained its massive monetary stimulus as it seeks to have inflation stably reach 2% on the back of strong wage growth, even as a weaker yen pushes up food and energy prices and other major central banks are tightening policy.

 

  • Reuters, with additional editing by George Russell

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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