On Friday, the latest data released by the Japanese Ministry of General Affairs showed that as the rise in non fresh food and accommodation prices slowed down, Japan's inflation rate in March decreased compared to the previous month, which posed some obstacles to the outlook for the Bank of Japan's interest rate hike.
However, Japanese economists believe that as various industries in Japan announce wage increases in the future and commodity and energy prices continue to rise, the upward risk of inflation in Japan still outweighs the downward risk. Against the backdrop of the rapid depreciation of the yen in recent times, the Governor of the Bank of Japan has also made it more clear that the Bank of Japan may raise interest rates.
Japan's March CPI slightly lower than expected
Data shows that Japan's CPI increased by 2.7% year-on-year in March, slightly lower than the median forecast of 2.8% and the previous 2.8% by economists.
Japan's core CPI (excluding fresh food) rose 2.6% year-on-year in March, although lower than the previous 2.8% increase, but consistent with the median forecast of 2.6% by economists. Japan's core CPI (excluding fresh food and energy) rose 2.9% year-on-year in March, lower than economists' expectations of 3% and even lower than the previous value of 3.2%.
Among them, the price of non fresh food increased by 4.6% year-on-year, which has slowed down from the 5.3% increase in February; The hotel room rate increased by 27.7%, lower than the 33.3% increase in the previous month; Water and electricity costs decreased by 1.7% year-on-year, and natural gas prices decreased by 7.1%.
The general service industry (including restaurants and hotel rooms), which is relatively sensitive to rising labor costs, saw a price increase of 2.8%, lower than the 2.9% increase in February.
Kanako Nakamura, an economist at the Yamato Institute, said that although the data this time was lower than expected, it does not indicate that the momentum of Japan's service industry to raise wages and prices has weakened. "The inflation rate in the service industry is still above 2%, and the overall trend has not changed."
She believes that looking into the future, as companies in various industries in Japan announce salary increases, "it is almost impossible for companies to avoid raising prices," leading to inflation; In addition, with high commodity and energy prices; Quota; The upward risk of inflation outweighs the downward risk; Quota;.
The Bank of Japan announces "interest rate hikes"
Although it has been two years since Japan's core inflation rate exceeded the Bank of Japan's target of 2% for the first time, the Bank of Japan has been adhering to a negative interest rate policy until March this year, emphasizing the necessity of inflation driven by wage increases.
Even after lifting the negative interest rate policy in March, Bank of Japan Governor Kazuo Ueda insisted on releasing signals of easing to the outside world, emphasizing that the "easing environment will continue" and attempting to avoid market misunderstandings that the Bank of Japan will launch a series of monetary tightening policies.
However, the significant depreciation of the yen this week clearly caught the Bank of Japan off guard. This week in the Tokyo market, the Japanese yen has dropped from 147 yen to nearly 155 yen to the US dollar, about a month ago. Some analysts believe that this decline is inconsistent with Japan's economic fundamentals, partly due to the ongoing hostile actions between Israel and Iran causing panic.
On Thursday local time, Kazuo Ueda stated in Washington that as concerns about the rapid depreciation of the yen in Japan intensify, the Bank of Japan may raise interest rates to curb inflation caused by the weakening yen.
He said, "If the weakening of the yen leads to an increase in inflation rate and begins to have a significant impact on the economy, the Bank of Japan may take monetary policy action."