Consumer inflation in Japan’s capital exceeds BOJ goal for 8th month By Reuters

© Reuters. FILE PHOTO: Shoppers check foods at a supermarket in Tokyo, Japan January 10, 2023. REUTERS/Issei Kato

By Takahiko Wada and Leika Kihara

TOKYO (Reuters) – Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose 4.3% in January from a year earlier, government data showed on Friday, exceeding the central bank’s 2% target for an eighth straight month.

The increase, which was driven mostly by food and fuel bills but spread to a broader range of goods, will likely keep the Bank of Japan (BOJ) under pressure to phase out its massive stimulus programme, analysts say.

The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, exceeded a median market forecast for a 4.2% gain and marked the fastest year-on-year incease since May 1981. It followed a 3.9% rise in December.

The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 3.0% higher in January than a year earlier, picking up from December’s 2.7% annual gain.

The BOJ kept monetary policy ultra-loose this month but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households.

BOJ Governor Haruhiko Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.