Core inflation in Japan at a 41-year high

Japan’s core Consumer Price Index (CPI) surged by 3.1% last year, marking its highest level since 1982. Data released by the Ministry of Internal Affairs and Communications on Friday, January 19, revealed that the consumer price index, excluding fresh food items, witnessed a 2.3% year-on-year increase in December. This was slightly lower than the 2.5% recorded in November, but it marked the 21st consecutive month that these levels exceeded the Bank of Japan’s 2% target.

The report highlighted specific details, noting a 59% increase in hotel fees in December, while electricity bills experienced a decrease of approximately 20.5%. Notably, food prices saw the most significant rise in 48 years, with an 8.2% increase throughout 2023.

These inflation figures coincide with the Japanese government’s call for companies to raise wages ahead of the annual spring negotiations between employees and labor unions. However, it’s important to note that despite these inflationary pressures, average real and inflation-adjusted wages experienced a year-on-year decline for the 20th consecutive month in November.