MNI BRIEF: Japan's Dec Tokyo CPI Rises 4%; Highest Since 1982

The year-on-year rise in Tokyo core inflation rate accelerated to 4% in December from November’s 3.6%, indicating that nationwide core CPI will likely rise to near 4% in December compared to 3.7% in November, data from the Ministry of Internal Affairs and Communications showed on Tuesday.

The 4% rise in December is the fastest pace of price increases since April 1982, when it rose 4.2%, and marked the 16th straight rise.

The Tokyo core CPI remained above the Bank of Japan's 2% target for a seventh straight month in December, a sign that rising raw material costs were steadily pushing up a broad range of prices for daily necessities. The BOJ is expected to lift its CPI forecast for the 2023 fiscal year when it releases its January Outlook Report after the completion of the central bank's two-day meeting next week. (See MNI POLICY: BOJ To Raise FY23 CPI, Stick With Base 2% View)

The index was boosted by high prices for energy (+26% vs. +24.4%) and for foods excluding perishable foods (+7.5% vs. +6.7%).

The core-core CPI (excluding fresh food and energy) - a key indicator in the underlying trend of inflation – rose 2.7% y/y in December, also accelerating from +2.4% in November.

Prices for communications rose 6.9% y/y in December, up from 6.4% in November, as the negative contribution from low mobile phone charge last year waned.

Processed food prices, which BOJ officials are focused on and are sensitive to economic activity, rose 7.8% in December after rising 7.3% in November.