Inflation in Japan at its highest level since 2014

This photo taken on September 17, 2022 shows people shopping at a clothing store on Motomachi Shopping Street in Yokohama, Kanagawa Prefecture, south of Tokyo. Japan’s inflation rate reached 2.8 percent in August, the highest level since 2014, government data showed on September 20, 2022, as energy prices rose. (Photo by Richard A. Brooks/AFP)

Tokyo, Japan (AFP) – Japan’s inflation rate hit 2.8 percent in August, the highest level since 2014, government data showed on Tuesday, with the impact of higher energy prices.

The last time such numbers were seen, prices were artificially boosted by an increase in value-added tax. Excluding years in which tax increases affected the rate, inflation in August was the fastest in nearly 31 years.

Data from the Ministry of Internal Affairs showed that electricity, gas and gasoline were among the main factors contributing to the price hike.

The August figure was slightly higher than experts’ expectations of 2.7 percent, and follows a 2.4 percent rise in July.

This comes ahead of this week’s Bank of Japan meeting, which bucked the trend of its peers elsewhere and stuck to its ultra-loose monetary policy.

Other central banks have chosen to raise interest rates to fight spiraling inflation, but the Bank of Japan sees the current rate increases as temporary and linked to exceptional events such as the war in Ukraine.

The growing chasm between the bank’s policy and interest rate hikes elsewhere caused the yen to fall, hitting a multi-decade low against the dollar.

The Bank of Japan’s long-standing goal is to achieve a sustainable 2% inflation rate, which it considers necessary to revitalize the world’s third largest economy.

© AFP

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