Japan’s core consumer prices rose 3.0% in September on-year, the government said Friday, the highest level since 2014 as the falling yen and rising energy costs hit households hard.
The data, which excludes volatile fresh food prices, brings inflation well above the Bank of Japan’s long-term 2.0% goal.
But the central bank believes the rises are temporary and has declined to boost interest rates like its peers in other economies.
The latest data was in line with market expectations, but the last time such figures were seen, prices had been artificially bolstered by an increase in VAT, AFP cited.
Excluding years when tax hikes impacted the rate, September’s inflation was the fastest pace in nearly 31 years.
“The bulk of the price increases at the moment are rises in raw material prices,” while service prices associated with wages have not seen meaningful increases, Taro Saito, an economist at NLI Research Institute, said in a note released before the data.
He predicted it would take more time for Japan to achieve stable inflation through wage increases and rising of service prices.
While other central banks have opted to hike interest rates to fight soaring inflation, the BoJ views the current price increases as linked to exceptional events such as the war in Ukraine.
The growing gulf between the bank’s policy and rate hikes elsewhere has caused the yen to slump, reaching a decades-low level against the dollar.
