Japan inflation hits 4.2% in January

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MG News | February 24, 2023 at 09:48 AM GMT+05:00

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February 24, 2023: Japan's consumer prices rose 4.2% in January from a year earlier, a level not seen since September 1981, fueled in part by higher energy bills, government data showed Friday, as APP reported.  

The reading comes with traders awaiting an appearance in parliament by Bank of Japan chief nominee Kazuo Ueda later in the day.

The 4.2% rise, which excludes volatile fresh food, is well below the still sky-high levels that have sparked concern in the United States, Britain, and elsewhere, but far exceeds the Bank of Japan's longstanding inflation goal of two percent, it noted.

The market had expected a 4.3% increase in January prices. The latest data comes after a 4.0 percent jump in December, the highest since December 1981.

When both fresh food and energy prices are excluded, the figure for January is 3.2%.

Increases in electricity and gas bills, as well as telecommunication fees and price hikes for a range of processed foods, contributed to the January acceleration, the government data showed.

However, analysts expect that government measures to address fuel costs will help curb inflation in February, it added. 

The figures have added to the pressure on Japan's central bank to consider tightening its longstanding super-loose monetary policy.

But the central bank has so far bucked the trend set by peers abroad who have hiked rates to tackle rising prices.

Outgoing Governor Haruhiko Kuroda argues the current price rises are linked to temporary distortions like the war in Ukraine, and that the bank should stay the course until sustained rises linked to factors like wage hikes are seen.

In December, the central bank said it expected inflation to hit 3% for fiscal 2022, up from the 2.9% it predicted in October, it said. 

But it forecast inflation of only 1.6% for the following year, rising to 1.8% for fiscal 2024.

In November, officials shocked the markets by widening the band in which they allow rates for 10-year government bonds to move.

They said the decision would "improve market functioning", though the new level was immediately tested.

Copyright Mettis Link News 

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