Salem Radio Network News Thursday, July 7, 2022

Business

Japan’s Dec consumer inflation hovers at near 2-year high

By Kantaro Komiya and Leika Kihara

TOKYO (Reuters) – Japan’s core consumer prices rose 0.5% in December from a year earlier, increasing for a second month in a row at the fastest pace in nearly two years in a sign of broadening inflationary pressures from rising fuel and raw material costs.

The increase likely won’t trigger an immediate withdrawal of monetary stimulus by the Bank of Japan, with inflation still well below its 2% target and driven mostly by external factors rather than strong domestic demand.

But the central bank will face the challenge of taming market speculation of an early exit from ultra-easy policy as some analysts expect one-off factors to push up consumer inflation to near 2% in coming months.

The rise in the core consumer price index (CPI), which excludes volatile fresh food but includes energy costs, compared with a median market forecast for a 0.6% gain. It was in line with a 0.5% increase in November, which was the fastest gain since February 2020, government data showed on Friday.

Japan has not been immune to the impact of global commodity inflation with wholesale prices rising at a record pace, prodding more firms to raise prices and already shifting public perceptions that deflation will persist.

The BOJ raised its price forecasts on Tuesday but said it was in no rush to change its ultra-loose policy on the view the recent cost-push inflation will provide transitory.

BOJ Governor Haruhiko Kuroda has said the bank’s focus would be to scrutinise whether wages will rise enough to increase households’ purchasing power, allow firms to hike prices and help sustainably accelerate inflation.

There is uncertainty, however, on whether companies will heed requests by Prime Minister Fumiko Kishida to raise wages as stubbornly high input costs and the spike in the Omicron new coronavirus variant cases squeeze their profits.

(Reporting by Kantaro Komiya and Leika Kihara; editing by Richard Pullin)

Previous
Next

Editorial Cartoons

View More »

Gary Varvel
Mon, Jun 27, 2022

X CLOSE