TOKYO, 23rd August, 2024 (WAM) -- Japan's core consumer prices rose 2.7 percent in July from a year earlier, with the rate of increase expanding for the third straight month as energy costs were pushed up following a termination of government subsidies, data by the internal affairs ministry showed Friday.
Japanese news agency Kyodo News reported that the increase in the nationwide core consumer price index, excluding volatile fresh food, followed a 2.6 percent rise in June. The inflation rate has remained at or above the Bank of Japan's 2 percent target since April 2022.
Core-core CPI, which strips away both energy and fresh food and shows underlying price trends, was up 1.9 percent.
The results underscore ongoing inflation, which has weighed on Japanese households. A weaker yen has also pushed up import prices from food to energy.
Energy prices gained 12.0 percent, accelerating from 7.7 percent the previous month, as the government's measures to bear part of the rising energy expenses ended in June.
Electricity costs were up 22.3 percent, the biggest rise since 1981 when the oil shock jacked up fuel prices, according to the ministry. The price of city gas rose 10.8 percent.
The government recently decided to resume the subsidies temporarily from September.
Among major items, food prices increased 2.6 percent, down from 2.8 percent the previous month which was affected by bread product price hikes.
Prices of rice, Japan's staple food, were up 18.0 percent, the biggest increase in 20 years, due to lower supply following a hot summer last year and increased consumption by foreign visitors.
Prices for durable goods rose 5.2 percent due to higher demand for air conditioners amid record high temperatures for the month, the ministry said.
The trend of rising prices will embolden the Bank of Japan, which announced its second rate hike in four months in July and is exploring the possibility of further monetary tightening, experts said.
"It will definitely be a factor for the BOJ to consider in deciding on another rate hike by the end of this year," said Shingo Ide, chief equity strategist at the NLI Research Institute.
"They may be waiting until the financial market regains composure," he said, referring to the recent volatility in stock and currency markets following the central bank's largely unexpected rate hike in July.
"It will certainly elevate a sense of vigilance among market players."