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Japan reports rising inflation

Japan reports rising inflation

Japan yesterday reported its fastest rise in core consumer prices in almost a decade as sky-rocketing energy costs help to lift Asia's largest economy out of years of deflation.
Meanwhile the jobless rate fell unexpectedly as household spending and industrial output dropped, according to a raft of data for November that painted a mixed picture of the health of the Japanese economy.
Core consumer prices climbed 0.4 percent in November from a year earlier, the largest gain since March 1998, the government said.
Market forecasts had been for a rise of 0.3 percent after October's 0.1 percent gain, which snapped an eight-month losing streak.
Higher energy prices were largely behind the pick-up in inflation, which is likely to slow as global oil prices stabilize, said Mamoru Yamazaki, chief economist for RBS Securities in Tokyo.
"However, even if the contribution of oil products becomes low I believe that the CPI will remain in positive territory," he added.
Core consumer prices for the Tokyo area - a leading indicator released a month earlier than the nationwide index - rose 0.3 percent in December.
Despite the return to positive inflation, economists doubt the Bank of Japan will raise interest rates again until mid-2008 at the earliest given uncertainties about the health of the Japanese and global economies.
"Deteriorating external conditions have virtually exhausted the chances of a rate hike in 2008," Morgan Stanley economist Takehiro Sato wrote in a note to clients.
Japan's economy is gradually recovering from a slump stretching back more than a decade, but growth this year has fallen short of expectations amid a shaky global economy and a slump in the domestic housing market.
Economic and Fiscal Policy Minister Hiroko Ota said that the pick up in inflation was "not a desirable price increase" because it was caused by rising oil prices.


Updated : 2020-12-04 13:51 GMT+08:00