Japan’s inflation reaches a 40-year high as the Bank of Japan maintains easy policy

The core consumer price index in Japan rose 3.6% year on year, exceeding the 3.5% rise predicted by economists and the 3% gain seen in September. It was the biggest increase since February 1982, when a Middle East crisis caused an increase in energy prices. For the seventh consecutive month, inflation remained above the Bank of Japan’s 2% target. Household durable goods prices rose 11.8% in October, the most since 1975, owing to higher transportation, raw material, and energy costs. According to the data, Japanese firms may be shaking off their deflationary mindset as they apply price increases to a wider range of products.
The Bank of Japan predicts that average prices will be 3% higher in fiscal year 2023-23 than in fiscal year 2021-22.
Japan’s core consumer inflation accelerated to a 40-year high in October, fueled by currency weakness and imported cost pressures. However, economists do not expect the Bank of Japan to join the global trend of raising interest rates. They see this year’s inflation acceleration as a cost-push episode that will fade once import costs stop pushing.

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