Japan’s core inflation rate rose to 3.1 percent last year, the highest since 1982. The rise in food prices contributed to this, while the weaker Japanese currency made imports more expensive. But for December, the rise in core inflation, which excludes fresh food prices, slowed to 2.3 percent year-on-year from 2.5 percent in November.
Core indicator still above central bank target
Japan’s headline price indicator is still above the Bank of Japan’s 2 percent target and has been for 21 months. The even narrower core consumer price index, which is adjusted for energy and fresh food prices, rose 3.7 percent year-on-year. In November, its growth was 3.8 percent.
The Bank of Japan expects inflation to slow further in the coming months as the effects of higher costs for imported energy and raw materials fade.
The import glut
Japan is dependent on energy imports and is now at a critical point, according to Reuters. Meanwhile, the central bank continues to insist on an easy monetary policy until it sees that inflation triggered by higher costs will shift to inflation triggered by stronger demand and wage growth.
The gradual easing of inflation comes amid market expectations that the central bank will end its monetary policy of negative interest rates as early as this spring. The bank is expected to release its inflation outlook at next week’s meeting; analysts mostly do not expect a change in monetary policy.
Source Czech Press Office
