As the main determinant of national trends, Japan's capital city's core consumer prices increased at their quickest annual rate in 40 years in November and went above the central bank's 2% target for a sixth consecutive month, indicating broader inflationary pressure. Apparently, the consumer price index (CPI) in Japan increased significantly at 2% this year 2022, when compared to -0.2% last year 2021, according to GlobalData.
The rise in prices, which was primarily caused by rising food and fuel prices but also affected a wider variety of items, called into question the Bank of Japan's (BOJ) prediction that recent cost-push inflation would only be temporary.
On November 25th, 2022, the Tokyo core CPI, which incorporates fuel but exempts fresh produce, was 3.6% higher in November than a year earlier. The increase was higher than the 3.5% median market prediction as well as the 3.4% growth recorded in October 2022. Inflation in Tokyo last accelerated in April 1982, when the core CPI increased by 4.2% over the previous year. While the expense of imports and energy prices were the main factors in the increase, businesses also increased the price of durable goods because of the weak yen. The spread of price increases shows that inflation may remain high well into the following year due to the weak yen. For much of next year, core consumer inflation may remain close to the BOJ's 2% target, which would make it challenging for the bank to maintain its position that the price increases are only transitory. Following a 2.2% annual gain in October 2022, the Tokyo fundamental CPI index—which excludes fuel and fresh food—was 2.5% higher in November 2022 now than a year before in 2021.
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