Japan's Consumer Prices Rise 3.1% Last Year... Largest Increase in 41 Years

Causes Including Food and International Raw Material Price Increases

Japan's consumer prices have risen at the fastest rate in 41 years. Factors such as increases in food and international raw material prices have driven the inflation.

Japan's Ministry of Internal Affairs and Communications announced on the 19th that the consumer price index (excluding fresh food) rose 3.1% year-on-year last year. This is the largest increase since 1982, when consumer prices rose 3.1% due to the impact of the second oil shock.

This figure also exceeds the Bank of Japan's (BOJ) inflation target of 2%. The data strengthens expectations of a possible change in the BOJ's monetary policy.

Food prices excluding fresh food rose 8.2% year-on-year last year. This was due to food companies reflecting higher raw material and transportation costs in their prices. Kyodo News explained that this is "the highest rate of increase in 48 years since 1975."

Meanwhile, the consumer price index for December last year rose 2.3% compared to the same month the previous year. This is the lowest level in 18 months since June 2022 (2.2%). Nihon Keizai Shimbun explained that "electricity, city gas charges, and food prices have somewhat stabilized."