© Archyde.com. Japan’s inflation rate hits 8-year high
Inflation jumped, recording its fastest annual pace in nearly eight years and exceeding the central bank’s 2% target for the fifth consecutive month as price pressures mounted by rising raw material costs and a weak yen.
Stronger inflation in August fueled growing suspicion among economists that price pressure will last longer than the BoJ expected, although many still expect no immediate change in its monetary easing policy.
As reported by Archyde.com, the Bank of Japan will end its two-day policy meeting on Thursday, as analysts expect the bank to take into account the fragility of the economic recovery when deciding to keep short and long-term interest rates near zero.
“The weak yen is importing inflation into Japan,” said Takeshi Minami, chief economist at Norinchukin Research Institute. Core consumer price inflation is expected to reach 3% in October.
“Inflation may stay above 2% for another year or so,” he added. This may prompt the Bank of Japan to change the way it views rates.”
The rise in core CPI, which excludes volatile fresh foods but includes fuel costs, was slightly larger than the average market expectation of a 2.7% increase, following a 2.4% increase in July.
The increase is the fastest since October 2014, largely due to higher utility bills, higher food and grocery prices, and the effect of fading cuts to mobile phone charges implemented last year.
The world’s third-largest economy grew at an annual rate of 3.5% in the second quarter. But his recovery has been faltered by the resurgence of COVID-19 infections, supply constraints and rising raw material costs.