Tokyo, Japan (4E) – Consumer prices in Japan climbed 3.2 percent in April from the previous year, the largest gain in 23 years, driven by a sales-tax increase and the central bank’s stimulus.
Excluding fresh food, inflation rose from 1.3 percent the previous month, according to the statistics bureau data released Friday. The figure compares with the median estimate of 3.1 percent projected by 32 economists surveyed by Bloomberg News.
Household budgets are facing pressure from higher prices and stagnant wages as Prime Minister Shinzo Abe’s so-called “Abenomics” attempts to steer the economy following the 3 percent tax rise. Economists predict inflation to settle in 2014 and see the Bank of Japan to boost its stimulus later this year to meet its 2 percent inflation target, which removes the impact of the levy rise.
The central bank estimates that the increase in the sales tax to 8 percent from 5 percent that took effect on April 1 will contribute 1.7 percentage points to the annual consumer prices index in April, and 2.0 percentage points from May.
The so-called core-core inflation index, which strips off the volatile food and energy prices, gained 2.3 percent in April from the year-earlier month, the largest annual increase since December 1997.