Home ›› 26 Feb 2022 ›› Asia Biz
Consumer inflation in Japan's capital accelerated in February at the fastest annual pace in more than two years, suggesting that soaring fuel and food costs will weigh on consumption and the country's fragile economic recovery.
Analysts expect the crisis in Ukraine to further pace up inflation in coming months through a spike in global energy and commodity prices, adding to woes for Japan's economy that is heavy reliant on raw material imports.
"Import costs were already rising, so any further rise in raw material prices from the Ukraine crisis would deal a huge blow to Japan's consumption and corporate profits," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
The overall consumer price index (CPI) for Tokyo, considered a leading indicator of nationwide trends, rose 1.0 per cent in February from a year earlier, marking the fastest pace since December 2019, government data showed on Friday.
The Tokyo core CPI, which excludes volatile fresh food but includes energy costs, increased 0.5 per cent in February from a year earlier, accelerating from a 0.2 per cent gain in January. It compared with a median market forecast for a 0.4 per cent gain.
A 24.2 per cent spike in energy prices was the key driver of the rise in core CPI, underscoring the pain higher fuel costs are inflicting on households and retailers.
Prices also rose for a range of foods and services, though the increase was moderated by a temporary drag from cuts in cellphone fees, the data showed.
"If energy prices continue to rise, Japan's core CPI may hit 2 per cent in April and may not slow much thereafter," Shinke said.
Prices for international crude benchmark Brent shot above $105 a barrel after Russia, one of the world's top oil producers, attacked Ukraine.
