Japan consumer prices rise at fastest pace in nearly 2 years on fuel costs By Reuters

Japan consumer prices rise at fastest pace in nearly 2 years on fuel costs
© Reuters. FILE PHOTO: Shoppers wearing protective face masks, following an outbreak of the coronavirus disease (COVID-19), are seen at a supermarket in Tokyo, Japan March 27, 2020. REUTERS/Issei Kato/File Photo GLOBAL BUSINESS WEEK AHEAD

By Takahiko Wada and Leika Kihara

TOKYO (Reuters) -Japan’s November consumer inflation marked the biggest year-on-year rise in nearly two years on surging fuel costs, a sign that the fallout from global commodity price gains is broadening.

The increase, however, is unlikely to prompt the Bank of Japan (BOJ) to withdraw monetary stimulus any time soon, with inflation still distant from the central bank’s 2% target, analysts say.

The data released on Friday highlights the fresh challenge policymakers face in preventing rising costs of living from hurting already weak household spending and Japan’s fragile economic recovery.

BOJ Governor Haruhiko Kuroda said on Thursday a weak yen could be inflicting bigger pain on households than before by pushing up prices of imported goods.

“Faced with price hikes for a range of daily necessities, consumers may become even more cautious in boosting spending,” said Yasunari Ueno, chief market economist at Mizuho Securities.

Japan’s core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, rose 0.5% in November from a year earlier, government data showed, exceeding a median market forecast for a 0.4% gain.

It was the biggest increase since February 2020 and followed a 0.1% rise in October.

The gain was driven by a 15.6% surge in energy costs. Food costs also rose 1.4%, indicating households were facing higher grocery costs even when wage growth remains slow.

Core consumer inflation is already above 1% when stripping away the impact of this year’s cuts in cellphone charges, which knock off 1.5% point off the index, analysts say.

“We expect underlying inflation to accelerate to a peak of around +1.0% next year as goods inflation rises further and the drag from mobile phone tariff cuts drops out of the annual comparison,” said Tom Learmouth, Japan economist at Capital Economics.

Japan has not been immune to global commodity inflation, with wholesale prices rising a record 9.0% in November from a year earlier.

But core consumer inflation has hovered around zero, as firms remain cautious about passing on costs to consumers on concerns that households may hold back on spending.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave a Reply

Your email address will not be published.