TOKYO (Reuters) — Japan’s core consumer inflation accelerated to a 40-year high in October as a weak yen pushed up the cost of imported commodities, which were already rising due to global supply constraints.
The data suggests Japanese companies may be shaking off their deflationary mindset as they gradually raise prices of everything from fuel to food while coming under pressure from cost-push inflation.
The nationwide core consumer price index (CPI), which excludes volatile fresh food prices but includes energy, rose 3.6% year on year in October, versus a 3.5% rise expected by economists, and accelerating from the previous month’s 3.0% gain.
The jump marked the fastest gain since February 1982.
It also confirmed CPI growth remained above the Bank of Japan’s (BOJ) 2% inflation goal for a seventh straight month.
Despite widening price pressures, which are a growing concern for households, however, the BOJ would not join a global trend of tightening monetary policy through rate hikes.
BOJ Gov. Haruhiko Kuroda reiterated on Thursday a pledge to maintain monetary stimulus to support a fragile economy facing still weak inflation and reeling from the COVID downturn.
Kuroda has argued that global commodity costs account for half the factors for price hikes and that cost-push inflation would not last long.
Japan’s consumer inflation would likely reach 3% for the current fiscal year ending next March, but the pace would fall to half that rate next year as commodity and other cost-push factors run their course, Kuroda has said.
In a sign subcontractors are struggling with wholesale price pressures, the corporate goods price index (CGPI) jumped 9.1% in the year to October.