Tokyo: Japan’s core consumer inflation hit a 41-year high in January as businesses passed on higher costs to households, data showed on Friday (24 February), with the central bank We continue to face pressure to phase out large-scale stimulus measures.
The data highlights the dilemma facing policy makers as rising fuel and commodity prices hit household budgets, many of which have yet to see wage increases sufficient to offset rising costs of living. I’m here.
The national core consumer price index (CPI), which excludes volatile fresh food but includes energy costs, rose 4.2% year-on-year in January, in line with the median market forecast, seen in December. Accelerated from a 4.0% annual increase.
January’s rate of increase was the fastest since September 1981, when the oil crisis in the Middle East sent fuel prices soaring, hurting Japan’s import-dependent economy.
The data show that the core consumer price index is now above the Bank of Japan’s (BOJ) target of 2% for the ninth straight month.
“Inflation will probably peak in January, but it won’t fall below the BOJ’s 2% target for some time,” said Yoshimasa Maruyama, chief economist at SMBC Nikko Securities.
“But there are questions as to whether higher inflation is sustainable as food and fuel costs are a major factor,” he said.
Governor-elect Kazuo Ueda faces challenges in maintaining the BOJ’s yield-adjusting policy, which has come under fire from markets betting that strong inflation will force banks to raise interest rates.
With the approval of the Diet, Ueda is expected to succeed incumbent Haruhiko Kuroda when his term ends in April. At Governor Ueda’s first policy meeting on April 28, the Bank of Japan will release its inflation forecasts through fiscal 2025 for the first time.
The Japanese economy avoided recession in the fourth quarter of last year, but was far weaker than expected as business investment was weak.
Uncertainty over the global economic outlook will weigh on Japan’s slow recovery from the scars of the Covid-19 pandemic, analysts say, as private consumption holds up against headwinds from rising costs of living.- Reuters