With corporations passing on increased costs to consumers, core consumer inflation in Japan hit a fresh 41-year high in January, according to data released on Friday, keeping the pressure on the central bank to wind down its massive stimulus program.
Excluding highly volatile fresh food but including energy costs, the national core consumer price index (CPI) increased 4.2% in January from a year earlier, which was in line with the median market prediction.
The report highlights the challenge faced by policymakers as people are slammed by growing gasoline and daily need prices, but many have not seen salary increases sufficient to offset the greater cost of living.
According to the data, the annual increase in the core CPI was 4.3%, while the CPI excluding fresh food and energy prices increased by 3.2%.
The report revealed that core consumer inflation has now been above the Bank of Japan’s 2% target for nine consecutive months, largely due to ongoing rises in the prices of gasoline and raw materials.
Markets have wagered that the Bank of Japan would have to hike interest rates in response to rising inflation, making it difficult for incoming Governor Kazuo Ueda to continue the BOJ’s yield control program.
Following obtaining parliamentary approval, Ueda will replace current BOJ’s head Haruhiko Kuroda in April.
