Japan's Inflation Rises

Japan's consumer prices rose for a fourth month in January, matching the fastest pace in more than nine years, as companies passed on higher costs of oil, wheat and soybeans.
TradingEconomics.com, Bloomberg 2/28/2008 4:43:43 PM

Core consumer prices, which exclude fresh food, climbed 0.8 percent from a year earlier, the same rate as December, the statistics bureau said today in Tokyo.

The successor to Toshihiko Fukui, who steps down as Bank of Japan governor next month, will have to find a way to implement monetary policy as economic growth slows and inflation accelerates. Price pressure will mount even as the expansion cools, central bank policy maker Atsushi Mizuno said yesterday.

Separate reports showed the unemployment rate stayed at 3.8 percent and the ratio of jobs to applicants remained at a two- year low. Household spending rose 3.6 percent from a year ago.

Japan's prices are rising just as manufacturers cut production amid concern a deepening U.S. slump will weaken exports to emerging markets. Output slid 2 percent in January from a month earlier, twice the pace economists predicted.

Tokyo's core prices, a harbinger of the nationwide index, rose 0.4 percent in February from a year earlier, the same pace as January. Gasoline has a lower weight in the index for Tokyo because residents of the capital don't drive as much.

Excluding energy as well as food, Japan's consumer prices fell 0.1 percent in January. By that measure, prices have failed to rise for more than nine years.