Japan’s Ministry of Internal Affairs and Communications said today that the core consumer price index (CPI), which excludes prices for basic food items, rose 0.8% in March from a year earlier. This was the largest increase in more than two years, driven by higher energy and commodity costs due to the war in Ukraine and the sharp weakening of the yen.
The most important factor is the fastest rise in energy prices in more than 40 years, which gave the consumer price index its seventh consecutive year-on-year increase. And it is the strongest increase since January 2020.
Rising prices for crude oil and other fuels pushed the core consumer price index up 0.1% in fiscal 2021 through March. This is the first increase in 2 years.
Analysts expect the core inflation index, a key measure of inflation, to approach the Bank of Japan’s (BOJ) long-term target of 2%.
The rising inflation outlook has put pressure on policymakers to ease the burden on budgets ahead of the Royal Council elections. Japanese Prime Minister Fumio Kishida is expected to announce economic measures next week.