Japanese Inflation Increased 2.1% in April, Surpassing the BOJ’s Target for the First Time in Seven Years

Japan’s Ministry of Internal Affairs and Communications reported on May 20 that the consumer price index (CPI) rose 2.1% in April from a year earlier. This was the fastest growth in seven years and was above the Bank of Japan’s (BOJ) 2% inflation target for the first time since 2015, as the yen weakened and commodity prices soared, leading to higher import costs.

The CPI rose in April as months of drastic cuts in mobile rates had little impact on inflation data. In March, inflation rose by 0.8%.

In addition, the war in Ukraine affected energy prices. Crude oil and raw materials also rose, putting inflationary pressure on Japan, which lacks resources.

Kyodo news agency reported that core CPI, which excludes staple food prices, was last above 2% in March 2015 following the consumption tax increase from 5% to 8%.

Apart from the impact of tax increases, the CPI has not maintained above the 2% target since the BOJ introduced accommodative monetary policy under the current governor, who took office in 2013.

Energy prices rose by 19.1%, with gasoline, kerosene, gas and electricity all posting double-digit increases.

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