Consumer prices excluding fresh food climbed 4% in the capital in December, according to the ministry of internal affairs Tuesday. Economists had forecast a 3.8% rise.
The Tokyo figure is a leading indicator of the nationwide trend, and the quickening suggests the country’s price growth may also have accelerated in the final month of last year.
Prices in Tokyo have exceeded the Bank of Japan’s 2% price target for seven months, but that likely won’t convince Governor Haruhiko Kuroda that the trend will stick yet. The BOJ expects prices to cool below 2% next fiscal year. Kuroda said the central bank would go ahead with monetary easing until Japan achieves its inflation goal on a sustainable basis, with accompanying wage growth.
Still, the recent figure, at double the bank’s target, will likely prompt speculation over further policy shifts following the surprise tweaks to the yield curve control program announced in December.
A separate data report showed household spending declined for the first time in three months in November, indicating that the inflationary wave has likely begun to eat into household spending.
What Bloomberg Economics Says...
“Looking ahead, we see core inflation slowing to around 2.6% in 1Q23 from 3.6% in 4Q22. Subsidies starting in January to support discounts on electricity and gas bills could reduce core CPI inflation by as much as 0.8 percentage point in 1Q. The recent appreciation in the yen, albeit from a low base, may help to limit price gains on imports."
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
