TOKYO (Kyodo) — Core consumer prices in Japan jumped 4.2 percent in January from a year earlier, rising at the fastest pace since September 1981 on higher energy and food prices, government data showed Friday.
Excluding volatile fresh food items, the core consumer price index was above the Bank of Japan’s 2 percent inflation target for the 10th straight month, the Ministry of Internal Affairs and Communications said, though the central bank views the trend as temporary.
The ministry said that due to the government’s decision to subsidize utility bills for consumers, electricity and gas prices are expected to be lower in February.
The impact on the index of further hikes in food prices expected from February will likely be offset by the reduced electricity and gas prices, an official from the ministry said.
In January, energy prices rose 14.6 percent, with electricity and city gas climbing 20.2 percent and 35.2 percent, respectively.
Food prices went up 7.4 percent, including for products such as fried chicken, potato chips, and hamburgers, as companies passed on the increase in raw material, transportation fees and other costs to consumers.
January’s inflation rate advanced from 4.0 percent marked in December last year as the government’s subsidy program to spur the tourism sector was trimmed in the reporting month, resulting in a smaller fall in accommodation fees.
Japan has seen inflation grow, as the weaker yen coupled with the Bank of Japan’s ultraeasy monetary easing policy has raised import costs. Russia’s war against Ukraine and the consequent disruption to supply chains have pushed up raw materials and energy costs.
BOJ governor nominee Kazuo Ueda told a confirmation hearing in parliament on Friday the central bank’s 2 percent inflation target is still far off and that he will maintain monetary easing to support the economy if appointed the bank’s chief as successor to incumbent Haruhiko Kuroda, whose term is set to end in April.
Takeshi Minami, chief economist at the Norinchukin Research Institute, said companies are likely to remain under pressure through June to increase prices on foods and daily items.
But “the core CPI could fall below 2 percent by the end of 2023,” Minami said.
“Pressure on the retail sector to increase prices would likely ease as spending momentum is also weakened due to the price hikes,” he said, adding that many businesses have also been adapting to rises in raw materials and other costs since Russia’s invasion of Ukraine started a year ago.
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