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Japan’s Inflation Gauges Jump to Record High

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Window cleaners prepare their work in front of an electronic stock board showing Japan’s Nikkei Index at a securities firm, on Tuesday, Aug. 23, 2022, in Tokyo. Asian shares are trading lower Tuesday, echoing a broad sell-off on Wall Street amid speculation about another interest rate raise from the U.S. Federal Reserve. (AP Photo/Eugene Hoshiko)

Japan’s underlying inflation measures increased the most ever on record, as higher energy prices and a weak yen continue to compel businesses to pass their costs onto consumers.

Multiple gauges showed new records and signaled broader inflation, according to data released on Tuesday by the Bank of Japan, that nation’s central bank. The trimmed mean—a measure of price growth that factors out the biggest gains and falls—renewed its record by rising 1.8% from a year earlier. The mode, or the most frequent pace of price increase, climbed to 0.7%, the highest gain in data going back to 2001.

Meanwhile, the share of items showing a price increase in the consumer price basket rose to 73.2%, the highest proportion on record.

The still relatively small gains compared with Europe and the United States are unlikely to lead the Bank of Japan to normalize policy anytime soon. But the results suggest Japanese businesses and consumers are experiencing a shift in inflation dynamics they haven’t seen in a long while, after going through a prolonged period of deflation.

A key factor going forward is whether growth in wages will catch up with inflation, as their lag has left concerns over the sustainability of the price gains and the potential impact on domestic spending.

Consumer prices, excluding fresh food, a key gauge for the central bank, rose 2.4% last month, the highest level since 2008, barring tax-hike years. Some economists say it’s on the path for another increase, to 3% or above, later this year, which would further complicate the central bank’s task of communicating its reasoning behind sticking with rock-bottom interest rates.

Bryan Jung

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Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.



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