Japan's consumer prices rise to highest level in 40 years

January 20, 2023 (MLN): Japan's consumer prices rose 4% in December from the previous year, according to government data.

This is the highest level seen since December 1981 and was driven by higher energy bills. The acceleration came after a 3.7% increase in prices in November, and the data from the internal affairs ministry showed inflation for the 2022 calendar year stood at 2.3%.

The figures were released days after the Bank of Japan decided to keep its ultra-easy monetary policy intact, despite other central banks raising rates to tackle rising prices.

The December figure is well below the levels seen in other countries, but it exceeds the BoJ's longstanding inflation goal of 2%.

Even when excluding volatile fresh food and energy prices, the figure for December was still 3%. The rise in prices was attributed to increases in electricity and gas bills, as well as telecommunication fees and price hikes for processed foods.

The BoJ is hesitant to end its easing program without clear signs that price rises will be sustained, including rising wages.

The spring season is when corporate Japan traditionally faces requests for wage increases, and the government has urged companies to raise persistently stagnant salaries.

APP