Japan’s core consumer prices rose at the fastest rate in over two years in March, reflecting the soaring cost of energy and other products, official data showed Friday.
The core consumer price index, which excludes fresh food, edged up 0.8 percent year-on-year, in line with market expectations.
The index has marked increases for seven straight months, reflecting pandemic distortions including supply chain issues and, more recently, the effects of the war in Ukraine.
“The pace of the rise in prices of electricity and gas grew, though the pace of petroleum cost increases decreased,” the internal affairs ministry said in a statement.
Rising prices for other items, including processed food and durable goods, also contributed to the increase, it said.
However, the figure remains far below the Bank of Japan’s target of 2.0 percent, seen as necessary to turbocharge the world’s third-largest economy, and the recent increases are viewed as driven by exceptional rather than durable circumstances.
The figure is also much lower than elsewhere in the world, and excluding energy, prices were actually down 0.7 percent in March.
The increases come as the yen plummets in value against the dollar, which may now be starting to harm Japan’s economy, according to economists and politicians, because it drives up the cost of imported goods, notably energy.
The Japanese currency has been at a 20-year-low against the dollar in recent days, touching the 129 level, due mainly to the interest rate gap between Japan and the United States.
On Friday, Japan’s Finance Minister Shunichi Suzuki warned that “dramatic movement in the foreign exchange market is not desirable and we are seeing dramatic movement.”
So far, however, there has been little sign of willingness from the government or central bank to directly intervene to strengthen the currency, reports AFP.