TOKYO (Reuters) - Japan’s core consumer inflation hit a fresh 41-year high in January as companies passed on higher costs to households, data showed on Friday, keeping the central bank under pressure to phase out its massive stimulus program.
The data underscores the dilemma policymakers face as soaring prices of fuel and daily necessities hit households, many of whom have yet to see wages rise enough to make up for the higher cost of living.
January’s rise was the fastest since September 1981, when fuel costs spiked due to the Middle East oil crisis and hit Japan’s import-reliant economy.
Core consumer inflation has now exceeded the Bank of Japan’s 2% target for nine straight months, mostly reflecting persistent rises in fuel and raw material costs, the data showed.
Incoming Governor Kazuo Ueda faces a challenge in sustaining the BOJ’s yield control policy, which has come under attack by markets betting strong inflation will force the bank to raise interest rates.
Speaking in parliament, Ueda said the BOJ must maintain ultra-low rates as the recent acceleration in inflation is driven largely by rising raw import costs, rather than strong demand.