Japan’s inflation re-accelerated last month after cooling earlier in the year, likely supporting views that the central bank might have to revise its price outlook, bringing the Bank of Japan (BOJ) a step closer to policy normalization.
Consumer prices excluding fresh food rose 3.4 percent from a year ago, quickening from the previous month, driven by gains in processed food and hotel prices, the Japanese Ministry of Internal Affairs and Communications reported yesterday.
The result came in line with analysts’ forecasts.
Photo: Reuters
The national data were consistent with the results of the leading Tokyo figures, which showed renewed upward momentum after two months of deceleration.
The acceleration in the key inflation gauge is likely to cement the view of many BOJ watchers that the central bank would bump up its price forecasts, leading to speculation over policy adjustment as early as July.
“These are very strong figures,” Dai-Ichi Life Research Institute senior executive economist Yoshiki Shinke said.
Underlying inflation “continues to accelerate, reflecting businesses passing their costs onto consumers. There is no doubt that the BOJ will raise its inflation outlook for this fiscal year in July,” he said.
In the latest quarterly outlook report, the BOJ projected core prices rising at just 1.6 percent in fiscal 2025, implying that the bank’s 2 percent sustainable inflation goal would not be achieved within its forecast period.
At the same time, new BOJ Governor Kazuo Ueda has indicated that once the inflation target comes into sight, he would adjust existing policy, including the yield curve control program.
Processed foods continued to drive overall inflation, boosting it by 2 percentage points. Food prices rose 9 percent compared with the previous year, the biggest jump since 1976. Service costs increased 1.7 percent, the biggest gain since 1995 excluding the impact of sales tax hikes.
Prices excluding the impact from energy and fresh food, a measure of the deeper inflation trend, also quickened to the fastest pace since 1981.
Food price hikes also do not seem to be ending anytime soon. The prices of about 5,600 food items are expected to rise from next month, a Teikoku Databank report said.
“Food price increases will continue at least until this fall,” the data firm said.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his