Japan’s inflation has risen to its highest level in 40 years as a weak yen drove up commodity prices already surging worldwide.
Core consumer inflation, which excludes volatile fresh food prices, rose by 3.6 percent in October compared with the previous year, government data showed on Friday, the fastest pace of growth since 1982.
While low compared with the rates of inflation seen in economies such as the United Kingdom and the United States, the price growth well exceeds the Bank of Japan’s inflation target and follows decades of stagnation in the world’s third-largest economy.
The Bank of Japan has defied the global trend of rising interest rates, with Governor Haruhiko Kuroda this week reiterating the need to maintain stimulus to support the country’s fragile economic recovery from the COVID-19 pandemic. Kuroda has argued above-target inflation is temporary and largely the result of global commodity prices.
Economic data released earlier this week showed that Japan’s economy unexpectedly contracted by 0.3 percent in the third quarter after three consecutive quarters of growth, as private consumption slumped.
Japanese Prime Minister Fumio Kishida last month unveiled a $260bn stimulus package aimed at propping up the economy, including measures to help households manage rising energy costs.
While the central bank’s loose policy has helped boost the profits of Japanese firms overseas by driving down the value of the yen, it has contributed to the rising costs of imported goods.
The Japanese currency plunged to a 32-year low in October, hitting 151 yen to the US dollar, although it had since recovered to about 140 yen as of Friday.