The core inflation in Japan accelerated to 0.9% in November on an annual basis. According to the Ministry of Internal Affairs and Communications, the index of core consumer prices, which excludes fresh food prices due to their volatility, has risen for the 11th consecutive month. For comparison the index had a value of 0.8% last month. However, the index remains well below the target of the Japanese Central Bank of 2%.
Accelerating inflation is largely due to higher gasoline and utility prices. However, against the backdrop of the still sluggish wage increase of only 1.8%, the households are still reluctant to spend, so companies prefer not to raise their prices.
Without energy and fresh products, the inflation accelerated by only 0.3% annually.
The October report from the Bank of Japan meeting showed that although most central banks did not consider it necessary to boost incentives, they agreed that the “powerful” quantitative easing should be maintained for the moment.
According to the economists there is a chance that inflation will accelerate gradually towards the beginning of the financial year in April after a tightening labor market pressures companies to increase pay. The inflation, however, remains far from the 2% target of the BoJ, so the central bank is likely to maintain its current monetary policy.
Other data, showed that sustainable recovery is likely to increase. The unemployment rate has reached a new 24-year low of 2.7% in November, and the supply of new jobs has risen to nearly 44-year high.