Consumer prices have been on the rise since late 2022.
Japanese consumers were hit with the biggest price spikes in over 40 years in March, with especially severe increases for food and electricity, government data shows.
The core consumer price index (CPI), which excludes fresh food but includes energy costs, jumped 3.1% in March from a year ago. The reading was unchanged from the previous month and sharply lower from January’s 4.2%, mainly due to the government’s subsidies to soften the cost of utility bills for households.
Excluding both food and energy in the index, inflation was measured at 3.8% in March from February’s 3.5%. It has been well above the Bank of Japan’s (BOJ) 2% target for ten months in a row.
Data shows that overall energy prices including electricity rates jumped 12.8%.
The pace of rising inflation was the fastest since 1981, when the country suffered from a spike in fuel costs due to the Middle East oil crisis.
“Food price hikes are expected to continue at least until around June,” an official from the Internal Affairs Ministry was quoted as saying by the Japan News.
According to the think tank Mizuho Research & Technologies, the core CPI will continue rising around 3% year-on-year in the coming months. It projected that real wages will not turn positive until the latter half of fiscal 2023.
The BOJ’s new governor, Kazuo Ueda, who will hold his first policy-setting meeting next week, has vowed to keep monetary policy ultra-loose to promote more wage hikes by companies and until there is more evidence that the rise in inflation has become sustainable and driven by strong demand rather than supply pressures.
Skyrocketing global commodity prices have been putting pressure on Japanese companies, which in turn pass the burden of high costs onto consumers.
Image credit: Alex Knight