Tokyo's Core Consumer Inflation Sets Fastest Rise In 8 Years

Core consumer prices in Tokyo jumped 2.6 percent in August from a year earlier, marking the fastest pace of gain in about eight years, government data showed Friday, Aug. 26, 2022, fresh evidence of inflationary pressures from higher energy and food prices aggravated by a weak yen, Kyodo News reported.

Photo Insert: Excluding perishables, food prices gained 3.8 percent, and more price hikes are expected in the coming months as Japanese companies plan to pass on higher costs.

The figure in Tokyo, staying above the Bank of Japan's 2 percent target for the third straight month, is seen as a leading indicator of what to expect nationwide. Some economists expect the core consumer price index, excluding volatile fresh food items, across the nation to rise over 3 percent before year's end.

Tokyo’s core CPI last saw a 2.6 percent rise in October 2014. Stripping away the effects of a consumption tax hike, the rise is the biggest since June 1992, the Ministry of Internal Affairs and Communications said. Tokyo has seen core consumer inflation accelerating for the 12th straight month.

The rising inflationary trend, however, is unlikely to change the Bank of Japan's stance of keeping its ultralow rate policy anytime soon, given that its board members believe the recent bout of commodity inflation will only be temporary and monetary easing is needed to support the economy of the resource-scarce nation facing downside risks.

The BOJ's dovish stance is in stark contrast with its global peers, including the US Federal Reserve and the European Central Bank, which have already been tightening their policies to tame soaring inflation.

BOJ board member Toyoaki Nakamura said Thursday now is not the right time for the BOJ to join the global "rate-hike competition," adding that the central bank will spur wage growth by persisting with monetary easing, Mainichi Japan also reported.

By item, energy prices surged 25.6 percent from a year ago. Excluding perishables, food prices gained 3.8 percent, and more price hikes are expected in the coming months as Japanese companies plan to pass on higher costs, economists say.

The recent rise in core consumer inflation is partly because the year-on-year effect of sharply lower mobile data fees has begun to fall out of the data. The nationwide core CPI gained 2.4 percent in July, marking the sharpest rise in seven and a half years.

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