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Tokyo
Reuters
—
Japan’s core consumer prices rose 4.0% year-on-year in December, double the central bank’s target of 2% and hit a 41-year high, it was shown Friday.
Analysts say the data are likely to sustain market expectations that the Bank of Japan (BOJ) will soon end its yield-containment policy and raise interest rates further.
Core consumer price index (CPI) gains, which include oil costs excluding volatile fresh food, were in line with median market expectations and followed the annual 3.7% rise seen in November.
The annual rate of increase in the core CPI exceeded the Bank of Japan’s target of 2% for the ninth straight month.
“Inflationary pressures are quite high, and price increases are spreading beyond food and fuel,” said Yoshiki Niike, chief economist at the Dai-ichi Life Research Institute.
“Companies are no longer so cautious about raising prices.
Core Core CPI, which excludes both fresh food and energy costs, was 3.0% higher in December than a year earlier, accelerating from the 2.8% rise seen in November.
The Bank of Japan kept monetary policy very loose on Wednesday but raised inflation expectations in its quarterly forecast as businesses continued to pass on higher raw material costs to households.
Many market observers expect the central bank to implement yield curve control, a policy that caps long-term interest rates near zero, when dovish Governor Haruhiko Kuroda’s second five-year term ends in April. We anticipate phasing it out.
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