In Japan, the third world economy, prices are rising at the fastest pace in 40 years | Economy

The increase in energy prices, at 15.2% year-on-year, was the most contributing factor to the CPI increase in the tenth month of 2022, while the cost of electricity, gas and other fuels rose by 14. 6% compared to the previous year.

Japan’s consumer price index (CPI) rose 3.6% year-on-year in October, the highest rate in about 40 yearsagain driven by the increase in energy and raw material prices.

The indicator, which excludes fresh food prices due to high volatility, rose six-tenths compared to September, according to data released Friday by the Interior Ministry.

The increase in October comes after a 3% year-over-year increase in September and exceeds the Bank of Japan’s (BoJ) inflation target of 2% for the seventh consecutive monthpartly driven by the sharp increase in the costs of energy and raw materials.

The October increase is the fastest growth in Japan’s CPI since February 1982when prices rose another 3.6%.

The increase in energy prices, at 15.2% year-on-year, was the main contributor to the CPI increase in the tenth month of 2022, while the cost of electricity, gas and other fuels increased by 14.6% compared to last year.

Specifically, the price of electricity rose by 20.9% last month, gas by 20% and other fuels by 13.3%.

Dimensions

The Bank of Japan launched a extensive program of ultra-flexible monetary to place inflation at 2%, although this target was successively postponed.

In its latest quarterly economic forecast report for July, the BoJ revised its price increase estimate for the current Japanese fiscal year (ending March 31, 2023) upward by four-tenths, bringing it to 2.3%.

The Japanese central bank moves special emphasis on the importance of underlying inflation when it comes to indicating the real inflationary pressures experienced by the third world economyespecially those resulting from demand and not from external factors such as the rise in fuel prices.

Japan opts for monetary easing and maintains short-term interest rates at -0.1%, as well as its massive ETF purchase program to keep the 10-year government bond yield curve around 0%.

This growing divergence between interest rate hikes in the United States or Europe and those of the BoJ, which favors maintaining ultra-low interest rate stimulus, has been associated with the recent depreciation of the yen.

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