Japan inflation jumps 2.1 for first time since 2015

Japan’s consumer inflation in April accelerated 2.1 percent from a year earlier, as higher commodity prices and a weak yen helped lift the key figure to a seven-year high and above the Bank of Japan’s 2 percent target for the first time since 2015, government data showed on May 20, Report informs referring to Kyodo News.

The steep rise in the core consumer price index came as the effect of sharply lower mobile communication fees -- a big drag for months -- began to fall out of the inflation data. The figure compared with a 0.8 percent increase in March and marked eight straight months of gain.

The war in Ukraine has sent prices of energy, including crude oil, as well as raw materials higher, adding inflationary pressures to resource-poor Japan. While economists say the commodity-led inflation is likely to continue for months, the BOJ is expected to see the rise as temporary and persist with monetary easing.

The core CPI, excluding volatile fresh food items, was last above 2 percent in March 2015, in the aftermath of a consumption tax hike to 8 percent from 5 percent, according to the Ministry of Internal Affairs and Communications.

Energy prices surged 19.1 percent, with gasoline, kerosene, city gas and electricity bills all marking double-digit jumps. Gasoline was up 15.7 percent and kerosene 26.1 percent, though government subsidies to wholesalers to bring down retail prices helped ease the upward pressure.

Mobile communication fees were down 22.5 percent in April but the pace of decline slowed from 52.7 percent a month earlier.

Even without perishables, food prices gained 2.6 percent in April, the fastest pace since 2015, with wheat, meat, coffee beans and cooking oil among those affected. Of the 176 items surveyed, 127 saw higher prices, the ministry said.

The price gains come at a delicate time for Japan where consumers are not fully confident of an economic recovery from COVID-19, and politicians are wary of price-sensitive voters ahead of the House of Councilors election in July.

The rapid depreciation of the yen, which has fallen to 20-year lows against the US dollar, has proven a headache for Japan as it has boosted import costs.

The so-called core-core CPI, excluding both energy and fresh food prices, gained 0.8 percent, marking the first rise since July 2020.