Japan Inflation Hits Four-Decade High, Weighing on BOJ Position

Japan’s inflation hit its fastest clip in 40 years in October, an outcome that puts the central bank in an even more awkward position as it tries to explain the need to stick with monetary stimulus to pursue stable price growth, Bloomberg News reported. Consumer prices excluding fresh food climbed 3.6% in October from a year ago, with the acceleration driven by processed food and the fading impact of mobile phone fee cuts, the internal affairs ministry reported Friday. The reading outpaced a 3.5% forecast by analysts and marks the fastest price growth since 1982. Price increases have now exceeded the Bank of Japan’s 2% price target for seven straight months, though the result is unlikely to convince Governor Haruhiko Kuroda to change course. “It’s getting harder for the BOJ to keep saying that the current cost-push inflation is temporary,” said Mari Iwashita, chief market economist at Daiwa Securities Co. “If the yen remains weak, more companies will try to pass on costs to consumers.” Kuroda’s consistently maintained that the current cost-push inflation is only temporary, and that the central bank’s ultra-loose policy is necessary to keep supporting Japan’s recovery from the pandemic. Kuroda continued to reiterate that view Friday, speaking after the release in parliament. The BOJ currently expects price growth to weaken below 2% next fiscal year starting in April. Read more.