TOKYO – Japan’s consumer prices rose in September for the fourth straight month, boosted mainly by higher energy costs, in the latest set of data showing fitful progress toward revitalizing the economy.
The core consumer price index, which excludes food, was up 0.7 per cent compared with 0.8 per cent in August, the Management and Coordination Agency said. With food prices factored in, the index was up 1.1 per cent.
The government is striving to end a long bout of deflation through aggressive monetary easing and hefty spending on public works. Bank of Japan governor Haruhiko Kuroda insists the economy is on track to achieve an official target of 2 per cent inflation within the next year or so.
But economists say much of the increase in prices in recent months has been due to higher costs for imported food and energy as the Japanese yen has weakened as a result of mammoth monetary easing.
“Import price inflation has remained stubbornly high, so we could see a further mild increase in goods inflation in coming months. But the pass-through from the weak yen to goods prices has now mostly run its course,” Capital Economics said in a commentary Friday.
It said further prices increases would likely be muted.
A planned 3 percentage point increase in the 5 per cent national sales tax in April 2014 is expected to weigh on growth in the coming year, despite government stimulus measures to counter the expected impact on consumer demand.
Consumer spending is likely to gain some oomph, however, as shoppers rush to buy big ticket items such as vehicles ahead of the tax hike.
Weaker than expected growth in exports, despite the weaker yen, is also viewed as a sign of wavering momentum.
“Economic recovery takes a break,” said a headline in Friday’s edition of the financial newspaper Nikkei Shimbun.
Excluding food and energy costs, the inflation index was flat, the first time since 2008 that measure has not fallen.
Japanese consumers are facing price hikes for a wide array of items, including most food products. Fresh food prices rose 11 per cent in September from a year earlier, including a 58 per cent increase in the price of cucumbers. Gasoline prices rose 9 per cent and electricity rates 7.6 per cent, for a 5.4 per cent increase in overall utility rates.
Price increases for other consumer goods, housing and services have remained weak, however, due to competition and oversupply.
Wage increases, key to stimulating consumer demand, have been slow in coming. Major labour groups say they plan to push for more than 1 per cent increases in base wages in spring labour negotiations next year, for the first time in five years. But any increase in average incomes is likely to be more than offset by price and tax hikes.