Energy costs, weak yen push Tokyo inflation at fastest pace in 30 years
Energy prices and a weak yen sent core consumer prices in Tokyo 2.8 percent higher in September from a year earlier, the fastest pace of increase in over three decades when excluding the effects of tax hikes, government data showed Tuesday.
The core consumer price index for Tokyo excluding volatile fresh food items rose for the 13th straight month, the Ministry of Internal Affairs and Communications said, in fresh evidence households are increasingly feeling the pinch of the rising cost of living.
When the one-year period affected by a consumption tax hike in 2014 is taken into account, core consumer inflation accelerated at the equal-fastest pace since June 2014.
September’s gain was the fastest since April 1992 when Tokyo saw core CPI rise 2.9 percent.
The Tokyo inflation data is used as a nationwide indicator and economists expect national core CPI to rise 3 percent as early as September. The key gauge of nationwide inflation jumped 2.8 percent in August.
The Bank of Japan has taken the view that the inflation figure temporarily reaching its 2 percent target will not prompt it to shift from its ultralow rate policy. BOJ Governor Haruhiko Kuroda has said the central instead prefers to see inflation created by consumer demand and supported by strong wage growth among consumers.
The major drivers behind the country’s accelerating inflation have remained the same, with energy prices surging 24.2 percent from a year earlier. Food prices, excluding perishables, jumped 4.5 percent, with the pace of gain picking up from 3.8 percent in August, the data showed.
The government plans to craft by the end of October a comprehensive economic package that will include steps to mitigate the impact of rising prices on businesses and households.
According to the BOJ’s recent projections, core CPI is forecast to top 2 percent in the current business year until next March but will likely undershoot the target in both fiscal 2023 and 2024.
As higher input costs have already begun to weigh on corporate sentiment, however, Japanese firms expect to see a price increase of 2 percent or more next year, in three years from now, and in five years from now, the central bank’s survey showed.