Japan’s core consumer prices rose 2.8 percent in August to an eight-year high in the latest sign of cost inflation accelerated by a weak yen to the detriment of consumers, government data showed Tuesday, adding pressure to the moderate Bank of America. Japan increased. .
The nationwide consumer price index, which excludes volatile times for fresh food, remained above the BOJ’s 2 percent target for the fifth straight month, with the rate of increase accelerating from 2.4 percent in July. The index marked the 12th consecutive month of year-on-year growth.
Core CPI marked the largest increase since rising 2.9 percent in October 2014. Without easing the impact of the consumption tax hikes, core consumer inflation accelerated at the fastest pace since September 1991.
The yen’s rapid decline against the US dollar has pushed up the cost of imported crude oil and other energy, raw materials and foodstuffs, threatening to dent consumer confidence despite government efforts to ease the pain.
A growing number of Japanese companies appear to be passing on higher costs to consumers by raising sales prices, a positive development for the BOJ as it struggles for years to accelerate consumer inflation towards the elusive 2 percent target.
While inflation is picking up much more slowly in the United States and Europe, where their central banks are doing their best to raise interest rates to slow them down, Japanese consumers are sensitive to price increases at a time when wages are not rising much.
Energy prices rose 16.9 percent year-on-year, while electricity prices rose 21.5 percent as they track crude oil and natural gas prices with some lag. Kerosene prices rose by 18.0 percent and gasoline by 6.9 percent, both less than a month earlier. They would have surged higher without government subsidies to oil wholesalers to lower retail prices.
Food prices, excluding perishables, rose by 4.1 percent. Prices for durable goods, such as refrigerators and air conditioners, increased by 6.3 percent due to higher raw material prices and transportation costs.
The CPI data is expected to pose a challenge to the BOJ, which sees recent inflation as only temporary as economists expect the headline figure to rise further towards the end of the year.
The so-called core-core CPI, which excludes both energy and fresh foods, rose 1.6 percent for the fifth straight month.
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