According to government statistics, core consumer prices in Tokyo, which are regarded as a leading indicator of Japanese price trends, increased 1.9% in April from a year earlier, the quickest annual rate in seven years.
The surge in inflation was fuelled primarily by rising food prices and the dissipation of previous mobile charge cuts. The economists think that Japan’s price rises will speed to the central bank’s 2% objective in the coming months.
Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute said that the nationwide inflation may rise to 2% in April-June. He also added that inflation may not keep accelerating further as the pace of the energy price is slowing.
The increase in the Tokyo core consumer price index (CPI) was quicker than the median market prediction of 1.8%, followed by a 0.8% rise in March. The index excludes fresh food, which is a variable factor but includes energy goods.
In the overall reading, Tokyo’s CPI climbed 2.5% in April from the previous year, the sharpest rate of inflation since October 2014. The report indicated that the fading effect of last year’s mobile fee reduction pushed up the total CPI by 0.80 points, while non-fresh food costs pushed it up by 0.17 points.
According to a government official, to-go sushi packages, hamburgers and bread saw the biggest price hikes among food items in April. Also because of the government’s fuel subsidy schemes to cut gasoline and other energy expenses, energy prices in Tokyo grew 24.6% year-on-year in April, slower than in March. Posting the first increase since March, the core CPI in Tokyo excluding fresh food and energy items rose 0.8% in April.