Consumer prices in the world’s third largest economy rose 4 percent in December.
Japan’s prices rose at the fastest pace in more than four decades in December, fueling expectations that the country’s central bank might finally move away from ultra-low interest rates.
Consumer prices in the world’s third-biggest economy rose 4 percent year-on-year, the sharpest rise since 1981, government data showed on Friday.
Price growth compares to a 3.7 percent rise in November, which also marked a four-decade high.
The inflation figure comes days after the Bank of Japan (BOJ) decided not to back down from its ultra-loose monetary policy, which has bucked an international trend towards higher interest rates.
Japan has vacillated between periods of sluggish inflation and deflation since the 1990s, encouraging policymakers to rely on low interest rates to spur growth.
Although inflation in Japan is well below that of countries like the United States and the United Kingdom, it is well above the BOJ’s long-held target of around 2 percent.
Analysts are divided on whether the BOJ will hike rates soon, in part because Japan’s inflation has been largely driven by rising energy prices – which rose 15.2 percent in December – rather than broad-based price growth.
BOJ Governor Haruhiko Kuroda, whose term ends in April, has said he prefers to stick with ultra-loose monetary policy until wages rise further.
Many Japanese companies, including parent company of casualwear giant Uniqlo, have announced plans to increase wages amid rising prices and deepening labor shortages.
More than half of Japan’s big firms plan to raise wages this year, a Reuters poll showed on Thursday, although smaller firms, which employ the vast majority of Japanese workers, are seen as less able to raise higher wages to pay wages.
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