Tokyo (AFP): Japan’s core consumer prices rose 3.6 percent year-on-year in October, the government said Friday, the highest level in four decades due largely to rising energy costs and a weak yen.
The data, which excludes volatile fresh food prices, was slightly higher than analyst expectations of 3.5 percent in a Bloomberg survey and showed inflation at its highest rate since 1982. Last month, Prime Minister Fumio Kishida said the government would spend $260 billion on a stimulus package to cushion the economy from the impact of a weak yen and inflation.
The package includes measures to encourage wage growth and support households with energy bills, which have spiked since Russia’s invasion of Ukraine in February.
Inflation in Japan remains below the sky-high levels in the United States and elsewhere that have prompted the US Federal Reserve and other central banks to sharply hike interest rates.
But it follows decades of sluggish inflation and even deflation in the world’s third-largest economy, and Friday’s rate exceeds the Bank of Japan’s longstanding two-percent inflation target. However, the central bank sees recent price rises as temporary, and so has gone against the grain, keeping monetary easing policies in place that are designed to promote sustainable growth.
The BoJ’s refusal to change tack has driven the yen down against the dollar, inflating profits for Japanese companies that operate overseas but increasing the price of imported goods for businesses and consumers. On Friday, one dollar bought 140 yen, down from a peak of 151 yen last month but with the Japanese currency still far weaker than February levels of around 115 against the dollar.