TOKYO (AP) – Japan’s consumer inflation rate hit a 41-year high of 4% in December as prices for everything from burgers to gasoline rose.
This rate is still relatively low compared to some other nations, including the United States.
The last time core consumer prices rose sharply was December 1981, the Ministry of the Interior and Communications said.
The Federal Reserve and many other central banks raised interest rates to tame inflation, but the Bank of Japan kept interest rates at a long-term low of minus 0.1%.
A sharp weakening of the Japanese yen against the US dollar and other currencies has increased the pressure on the BOJ, with speculation rising that it may soon change course and start raising interest rates.
Japan’s core consumer price index excluding fresh food rose 2.3% year-on-year in 2022, the highest in 31 years, the ministry said.
The BOJ’s target inflation rate is around 2%. While prices rose more than usual and some companies such as Fast Retailing, which operates the clothing chain Uniqlo, announced wage increases, income in Japan was generally flat. Central bank officials say they expect inflation to ease as other economies slow and potentially enter recession.
Prices of several products, including snack bars, instant noodles and soy sauce, have increased recently, and further price increases are expected.
But Junichi Makino, an analyst at SMBC Nikko, expects inflationary pressures to ease in the coming months. Oil and many commodity prices have declined from last year’s sharp spikes, and the rising cost of imports “has peaked,” he said.
“It is a matter of time before prices come down, largely because of the cheap yen and the high cost of oil, coal and natural gas,” he said.
The Associated Press
