Japan prices predicted to rise 2.6% in FY 2022 amid Ukraine crisis

Japanese consumer prices, including fresh food, are expected to rise 2.6 percent in the current fiscal year through March from a year earlier, mainly due to Russia’s invasion of Ukraine and the impact of the yen’s depreciation, the Cabinet Office said Monday.

It also revised Japan’s real gross domestic product growth downward to 2.0 percent from the previous estimate of 3.2 percent released in January.

“Rising prices are a risk to the economy recovering from the corona virus pandemic,” Prime Minister Fumio Kishida said at a meeting of the Council on Economic and Fiscal Policy, where the projections were presented.

To prevent consumption from sliding amid surging prices of essential items, the government has pledged to take necessary steps, including giving reward points to households that reduce electricity consumption and aiding farmers grappling with high fertilizer costs.

The government plans to spend a total of about 260 billion yen ($1.9 billion) on the countermeasures by tapping into a reserve fund.

For fiscal 2023, the Cabinet Office predicted a 1.7 percent increase in consumer prices. It expects crude and other energy prices will remain high.

The Bank of Japan has estimated prices, excluding fresh food, will rise 2.3 percent in the current fiscal year.

The key economic council includes members of Kishida’s Cabinet, BOJ Governor Haruhiko Kuroda and business leaders.

SOURCE: NEWS AGENCIES