Tokyo — Japan’s core consumer inflation rate in April exceeded the central bank’s target of 2% for the first time in seven years, thanks to rising import costs, and the central bank is about to burn. It is not domestic demand.
Still, the 2.1% rise in the Core Consumer Price Index (CPI) announced on Friday is a very loose monetary policy by the Bank of Japan (BOJ), especially as households are suffering from rising costs without significant wage increases. The market is skeptical about maintaining the price index.
Core CPI data does not include prices for volatile fresh food, but does not include energy that has skyrocketed due to the war in Ukraine. Therefore, there are also costs for other products. This affects non-perishable prices, another factor in rising inflation.
Prior to April, the index had not risen very rapidly since 2008, or since 2008, except in mid-2010, which was affected by the sales tax hike.
Inflation has generally struggled to reach 1% for many years, despite the Bank of Japan’s efforts to reach 2.0%.
However, analysts said the ultimate goal was not a major reason for the celebration, as the cost of foreign energy and other commodities prompted an upward shift.
“Current price increases are due to rising import costs. Overall, inflation is a burden on businesses and households,” he said.
“If wages rise, households can expect real income to rise, but because they haven’t risen, households are being adversely affected,” he said.
The Bank of Japan has set an inflation target of 2% in 2013, the first year of its current president, Haruhiko Kuroda. He reiterates that the central bank will not rush to end its stimulating efforts, as the cost increase in inflation is temporary.
As a result, central banks expect monetary policy to remain very loose, with inflation stable at 2% and supported by significant wage growth. It takes that stance, even though other major central banks are tightening their policies.
Wages in Japan have barely risen compared to living expenses since the 1990s and are one of the most pressing issues for the world’s third-largest economy, accelerating households’ tendency to save rather than spend. increase.
The latest wage data for March show that real wages shrank for the first time in three months as inflation surpassed a slight year-on-year growth of 1.0% in total cash income.
Inflation in April, announced by the government, was in line with the median forecast in Reuters polls. It was much stronger than the 0.8% annual increase seen in March, but its early figures were more strongly affected by the sharp fall in mobile phone charges that are disappearing from the calculations.
Mobile phone charges were down 0.38 percentage points in April’s overall CPI compared to 1.42 percentage points in March.
Atsushi Takeda, chief economist at ITOCHU Economic Research Institute, said a significant rise in import costs meant that funds were flowing abroad.
“There is no doubt that it is financially bad,” he said.
Currently, inflation may be high by Japanese standards, but if wage growth is slow, inflation remains low compared to other regions because it is difficult for Japanese companies to raise prices. US consumer prices rose 8.3% in the 12 months to April.
According to a survey of 17 Reuters economists, consumer prices in the Tokyo region in May were year-on-year, according to data on May 27, as a sign that cost-push inflation is likely to continue to weigh on Japanese households. It rose by 2.0%. (Report by Daniel Leussink; edited by Stephen Coates and Bradley Perrett)
Japan’s April consumer inflation rate exceeded the BOJ’s target for the first time in seven years
Source link Japan’s April consumer inflation rate exceeded the BOJ’s target for the first time in seven years