Inflation in Japan has risen to its highest level in 40 years, as a weak yen pushed up commodity prices, which were already rising sharply worldwide.
Core consumer inflation, which excludes volatile fresh food prices, rose 3.6 percent in October from the previous year, government data showed on Friday, the fastest rate of growth since 1982.
Although low compared to inflation rates in economies such as the United Kingdom and the United States, price growth is well above the Bank of Japan’s inflation target and follows decades of stagnation in the world’s third-largest economy.
The Bank of Japan has defied the global trend of rising interest rates. Governor Haruhiko Kuroda this week reiterated the need to continue stimulus measures to support the country’s fragile economic recovery from the COVID-19 pandemic. Kuroda has argued that above-target inflation is temporary and largely a result of global commodity prices.
Economic data released earlier this week showed Japan’s economy contracted unexpectedly by 0.3 percent in the third quarter after three consecutive quarters of growth as private consumption fell.
Japanese Prime Minister Fumio Kishida last month announced a $260 billion stimulus package aimed at supporting the economy, including measures to help households manage rising energy costs.
While the central bank’s loose policy has helped boost Japanese companies’ profits abroad by depressing the value of the yen, it has contributed to the rising cost of imported goods.
The Japanese currency fell to a 32-year low in October, hitting 151 yen against the US dollar, though it had since recovered to around 140 yen as of Friday.