Japan’s Consumer Prices Index rose by 3.1% year-on-year in February, which is a slower rate than the four-decade highs seen in previous months.
AFP reported that the figure excludes fresh food and is in line with market expectations, following the introduction of relief measures by the government for the increasing cost of energy bills.
This marks the first deceleration in over a year and is a decrease from the 4.2% YoY increase seen in January, which was the highest level since September 1981, due in part to higher energy bills.
UBS economist Masamichi Adachi had predicted a decrease in inflation rate in February before the data was released, saying, “due to a discount on energy price with the government’s subsidies.”
While the 3.1 per cent rise is higher than the Bank of Japan’s two-percent target, it is lower than the high inflation rates seen in other countries such as the United States. Excluding both fresh food and energy prices, the inflation rate for February is 3.5%.
According to the report, the Bank of Japan believes that the rise in prices is due to temporary factors. In a policy meeting this month, the central bank left its ultra-easy monetary policy unchanged.
This meeting was the final one for outgoing governor Haruhiko Kuroda, who is stepping down after a decade in which he enacted a series of extraordinary ultra-loose policies.
Despite increasing pressure to increase interest rates to tackle inflation, similar to other central banks worldwide, the BoJ has maintained that it needs to see more evidence of sustained price increases, including salary increases, before taking any action.
