Prices Are Up For Japanese Citizens

 Prices Are Up For Japanese Citizens

Prices are up for Japanese citizens

The core consumer prices jumped up for a 5th straight month, though at a slower pace, in January in Japan. It is expected the central bank may raise interest rates and consumer inflation may pick up due to the rise in energy prices. Moreover, the mobile phone fee cut of last year is set to end.

The core consumer price index (CPI) includes fuel costs and excludes volatile fresh food prices. The jump was 0.2 percent compared to January 2021.

However, the forecast was 0.3 percent and 0.5 percent in polls conducted in previous months. NLI Research Institute executive research fellow Taro Saito said the inflation could be felt with higher energy and food prices from next month. It may go as much as 1.5 percent in April due to the impact of the mobile phone fee cut of 2021 coming to an end.

Meanwhile, the Bank of Japan (BOJ) is scheduled to meet to scrutinize the policy and price data would be one of the important factors. The core CPI has increased since September 2021. The prices of accommodation have jumped by 0.6 percent.

It is expected the BOJ may maintain the ultra-loose monetary policy to achieve the 2 percent inflation target. It could be in the form of expanding a subsidy scheme in gasoline and other fuel prices or cash handouts for households.

The overall energy prices jumped by 17.9 percent in January compared to the same month a year ago. It is the biggest rise in over 40 years due to a surge in fuel costs and electricity bills.

Even though the BOJ may implement massive monetary stimulus, but experts believe the measures may lead to weakening yen.

Meanwhile, the Russia-Ukraine tensions have made the situation worse very lately. The Petroleum Association of Japan has called the government to come up with some additional measures to keep the oil prices at the check from rising to higher levels as the economy and markets would be largely impacted.

Japan imports 4 percent of oil requirement from Russia while the world depends on the country for 10 percent of crude oil. Hence, it is believed the impact on oil prices would be extensive with a curtail in supply due to trade suspension. Ukraine is the leading exporter of wheat, corn and other grains, and invasion of Russia may impede farm supplies. About 70 percent of the land here is agricultural land.

Japan heavily relies on the two countries for crude oil and wheat. Nissin Food Products Co, which is well-known for instant noodle products including Cup Noodle, lately announced to be increasing prices on 70 percent of its products from June 1.

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