Japan’s inflation quickens as rice prices gain most in 50 years
Consumer confidence has dropped to a two-year low, while households’ price expectations have continued to rise, according to data from the government and central bank
[TOKYO] Japan’s consumer inflation advanced apace last month, supporting the central bank’s stance on a gradual rate hike path before US tariff measures clouded the economic outlook.
Consumer prices excluding fresh food rose 3.2 per cent from a year ago in March, accelerating from a 3 per cent increase in the previous month, the ministry of internal affairs said on Friday (Apr 18). That matched the median estimate of economists surveyed by Bloomberg. A gauge of underlying inflation that also excludes energy prices rose 2.9 per cent, as expected. That’s the fastest since March of last year.
Friday’s data are likely to keep Bank of Japan officials confident in their rate-hike posture as overall inflation has stayed above their 2 per cent target almost for three years. Governor Kazuo Ueda has maintained his stance on intending to raise rates given price trends, while also citing the need to closely watch how US tariff measures evolve.
The faster increase comes despite a drag from the government’s utility subsidies. Service prices rose 1.4 per cent from a year earlier, edging up from a 1.3 per cent gain in February, but matching January’s pace. Food prices rose 7.4 per cent from a year earlier, down slightly from 7.6 per cent in the previous month. The price of rice, the nation’s staple food, rose 92.1 per cent from a year earlier, the fastest pace in data going back to 1971.
Price gains are still high by Japan’s standards after more than a decade of deflation. Prime Minister Shigeru Ishiba’s approval ratings hit a new low this month since he took office in October, according to a poll by public broadcaster NHK. Consumer confidence has dropped to a two-year low, while households’ price expectations have continued to rise, according to data from the government and central bank.
In addition to the US levies, the elevated cost of living has raised debate among lawmakers on cash handouts or tax rebates ahead of an election likely in July, according to local media reports. Ishiba may find it harder to rebuff those calls as he seeks to shore up support for his minority government.
Japan’s inflation is expected to stay elevated in coming months as business owners contending with rising costs due to a labour shortage, higher material costs and prolonged yen weakness have become more willing to pass that burden onto consumers.
The number of price increases in food products will exceed 4,000 for the first time in 18 months in April, according to a survey of major food companies by the Teikoku Databank. BLOOMBERG
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