Inflation in Japan highest in more than four decades

By Al Mayadeen English
Source: News websites
20 Jan 2023 11:07

The central bank is being pressured to raise its interest rates in order to cope with the surging cost of goods and services.

Shoppers browse a Tokyo supermarket on Jan. 10. Japanese food producers plan to raise prices on thousands of products in the coming months. (Reuters)

Official sources revealed on Friday that Japan's inflation rate has reached an all-time high in the last 41 years, with a core inflation rate recorded at 4% last December - double the Bank of Japan's (BoJ) initial target pace of 2% that was set in the last year, the BBC reported on Friday.

The bank is being pressured to raise its interest rates in order to cope with the surging cost of goods and services.

Earlier this week, The BoJ announced it will maintain its fiscal policy to near zero rates, yet some analysts predict it may soon end its yield control policy and allow interest rates to rise more.

"Producer prices have been rising at a much faster pace than consumer prices for some time, but now companies are passing these costs on to consumers," Damian Thong, who heads Japan equity research at Macquarie Group, told the BBC.

"We believe that the BOJ will [eventually] end its negative interest rate policy," he added.

Despite this, Japan remains one of the countries with of the lowest inflation rates in the world.

Several analysts thought the central bank would depreciate the yen but on Wednesday, it announced that it maintained its interest rates near zero, which caused the yen to lose value against other major currencies.

Most recent data shows that inflation in the US stood at 6.5% in December, 9.2% in the eurozone, and 10.5% in the UK.