Tokyo-Japan’s consumer prices rose four percent in December from a year earlier, a level not seen since December 1981, fuelled in part by higher energy bills, government data showed. The acceleration comes after a 3.7 percent increase in prices in November, and the data from the internal affairs ministry showed inflation for the 2022 calendar year stood at 2.3 percent.
The figures were released days after Japan’s central bank again opted to leave its ultra-easy monetary policy intact, bucking the trend set by peers abroad who have hiked rates to tackle rising prices. The December figure is well below the still sky-high levels that have sparked concern in the United States, Britain and elsewhere, but it far exceeds the Bank of Japan’s longstanding inflation goal of two percent. Even excluding volatile fresh food and energy prices, the figure for December was three percent. Rises in electricity and gas bills, as well as telecommunication fees and price hikes for a range of processed foods contributed to the December acceleration, the government data showed.
But the central bank has consistently said it believes the price increases seen over the last year are temporary and linked to exceptional events like the war in Ukraine and spiking energy costs. It is reluctant to end its easing programme without clear signs that price rises are likely to be sustained, including rising wages. On Wednesday, it said it expected inflation to hit 3.0 percent for fiscal 2022, up from the 2.9 percent it predicted in October. But it forecast inflation of only 1.6 percent for the following year, rising to 1.8 percent for fiscal 2024.
“We are not at a point where we can foresee that the two-per cent target can be achieved in a stable and sustainable manner,” bank Governor Haruhiko Kuroda said Wednesday.
Still, the rise in prices for 2022 is the first in three years, and the bank has come under pressure to consider a shift in tack.
Last month, officials shocked the markets by widening the band in which they allow rates for 10-year government bonds to move.
They said the decision would “improve market functioning”, though the new level was immediately tested.
The persistent differences between the Japanese central bank and the US Federal Reserve, which aggressively hiked rates last year, have helped weaken the yen against the dollar.