Japan March consumer prices rise at fastest pace in over 2 years

div classBodysc17zpet90 cdBBJodivpBy Daniel Leussinkp

pTOKYO Reuters Japan‘s core consumer prices rose at the fastest pace in more than two years in March, raising worries higher energy and food costs could increasingly take a toll on households’ purchasing power. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe core consumer price index CPI, which excludes volatile fresh food prices but includes fuel and broader energy costs, jumped 0.8 in March from a year earlier, government data showed on Friday.p

pThe pace indicates the core CPI could near the Bank of Japans BOJ 2 target in April as the impact of mobile phone fee cuts from that month last year fades from yearly comparisons.p

pMobile phone fees pulled overall CPI down 1.42 percentage point in March, which a government official said would likely disappear from the yearonyear estimates in steps, especially in April, August and October.p

p“Around one percentage point will likely disappear in the April result, but its not likely it will drop out completely,” the official said, adding that he could not say what the chance was that yearonyear core CPI may exceed 2 in April.p

pThe price data will be among factors the BOJ will scrutinise at its next twoday rate review, which is scheduled to end on Thursday, where it is likely to raise its inflation forecast for this fiscal year to near 2.p

pCore consumer price inflation has posted a yearonyear increase every month since September. Marchs increase marked the fastest yearonyear rise since January 2020.p

p“Real incomes will be pushed down when prices go up so its likely to impact the economy that way,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research.p

p“When prices of food, fuel and other essentials rise it doesnt have a good impact on consumer sentiment. It will likely lead to a desire to save on spending in other areas.”p

pEnergy prices rose by 20.8 in March compared to the same month last year, their sharpest yearonyear gain in over four decades. Food prices excluding those of fresh food were up 2.0 yearonyear in March, the biggest rise in a single month since December 2015.p

pOverall, however, the rate of price increases in Japan has remained modest compared with much sharper gains in the United States and other advanced economies, as sluggish wage growth in Japan discourages firms from hiking prices much.p

pThe BOJ has stuck to its massive monetary stimulus as it seeks to have inflation stably hit its 2 target on the back of strong wage growth, despite worries that a weakening yen is driving up import costs of food and energy.p

p Reporting by Daniel Leussink Editing by Stephen Coates and Christopher Cushingp

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