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Saturday, 30 August 2008

CPI up 2.4%; biggest rise since 1992

Consumer price inflation grew 2.4 percent in July from a year earlier, the fastest rate of increase in more than 16 years, the government said Friday.

The nationwide consumer price index, which excluded volatile fresh food price, rose for 10th straight month to 103,4 against a base of 1000 for 2005. The rise was due to gasoline and utility price hikes and added to evidence that rising energy costs are weighing down the economy, the Internal Affairs and communications Ministry said in preliminary report. “I’m very concerned”, economic and fiscal policy minister Kaoru Yosano said after the release of the data, adding that the lack of wage hikes will only weaken domestic demand.

The minister also warned that also warned that the prices are expected to increase further as companies have yet to fully transfer rises in energy and materials costs onto product prices.

Excluding a one-year period during which consumer prices rose as a result of the April 1997 consumption tax hike, the headline reading was the fastest increase since June 1992, when the index expanded 2.5 percent. The rise was almost in line with the average market forecast of a 2.3 percent rise in a Kyodo News survey.

Energy costs as a whole grew 17.4 percent year on year. Petroleum product climbed 28.8 percent, with kerosene up 53.2 percent and gasoline prices rising 28.8 percent.

Utility costs were also higher. Electricity prices rose 5.4 percent and those for natural gas grew 5.9 percent.

Prices for nonperishable foods grew 3.8 percent due partly to higher grain prices. Bread prices increased 20.1 percent. Those for instant noodle rose 20.6 percent, with spaghetti up 32.0 percent and Chocolate up 27.6 percent.

Hiroko Iwaki, an analyst at the Development Bank of Japan, said the core CPI may have peaked in July, but that even as pace of increase slows, the index is expected to remain at relatively high levels of around 2 percent.

Source: Japan Times, August 30, 2008

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