Latest Stories

Japan prices rise at fastest pace since late 2008

TOKYO – Japan’s consumer prices rose in July at their fastest pace for almost five years, data showed Friday, giving cheer to the government’s easy-money policy but putting a strain workers owing to slow wage growth.

The reading, which excludes volatile prices of fresh food, was up 0.7 percent from a year earlier, the biggest rise since a 1.0 percent increase in November 2008 when expensive energy imports temporarily offset domestic deflationary pressure.

It also follows June’s 0.4 percent increase, which marked the first rise in 14 months, according to the internal affairs ministry.

The ministry added that unemployment edged down to 3.8 percent in July – its lowest since October 2008 – from 3.9 percent in June.

Separately the economy and industry ministry said factory output rose 3.2 percent on month in July, reversing a revised fall of 3.1 percent in the previous month.

The latest numbers will provide a lift for Prime Minister Shinzo Abe, who has pledged to reverse 15 years of deflation with active spending, which he says will stoke growth.

The latest factory output numbers are “good if we consider exports, which weren’t that favourable during the month”, said Norinchukin Research Institute chief economist Takeshi Minami.

“It shows the economic recovery remains intact,” he told Dow Jones Newswires.

Mizuho Securities Research and Consulting senior economist Norio Miyagawa said higher prices are “further proof that the Japanese economy is solidly recovering. The next challenge is how soon it will start pushing up wages”.

Household spending in July rose a marginal 0.1 percent on year, with disposable income at wage-earning households up 0.4 percent.

Although there are early positive signs of the effect of Abe’s policies, the higher consumer prices were fuelled by increases in the cost of electricity and gasoline, which could put a strain on workers amid stagnant wage growth.

The price increases in the past two months have largely represented “cost-push” inflation, driven by high global energy prices as well as a weaker yen that has made imports more expensive, Norinchukin’s Minami said.

“It’s a key for Japan whether we can smoothly shift from cost-push to demand-pull type of inflation,” Minami said.

The rises also come as Abe considers introducing a sales tax plan next year, which Minami, among other analysts, warns could smother any economic recovery.

The planned rise “will weigh on prices as the move is likely to kill the current positive momentum in prices by damping consumer sentiment”, he said.

Japan plans to raise its five-percent sales tax to eight percent in April 2014 and to 10 percent in October 2015 to help tackle mounting public debt as the population ages.

The government is expected to make a final decision in September on whether to go ahead with the hike.

Finance Minister Taro Aso said Friday the latest economic data showed a continued recovery in the world’s third largest economy and would positively influence a tax hike decision.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Commodities , economy , Employment , Japan

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Firetruck rams California eatery; 15 injured
  • 9 confirmed dead after ferry sinks off South Korean coast
  • Aquino to public: Learn to sacrifice
  • 20 killed as Islamic extremists rampage in Nigeria
  • Drug firm Novartis to help Leyte firefighter
  • Sports

  • Walker leads Bobcats over Bulls in OT, 91-86
  • Man City slips further out of title contention
  • Federer would skip tennis to be with wife, newborn
  • Manny Pacquiao in PBA? If so, he’ll wear No. 17
  • PSC sets Blu Girls US training
  • Lifestyle

  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • This is not just a farm
  • Clams and garlic, softshell crab risotto–not your usual seafood fare for Holy Week
  • Moist, extra-tender blueberry muffins
  • Entertainment

  • American rapper cuts own penis, jumps off building
  • Jay Z to bring Made in America music fest to LA
  • Why Lucky has not bought an engagement ring for Angel
  • Derek more private with new girlfriend
  • ‘Community’ star happy with return of show’s creator
  • Business

  • Fired Yahoo exec gets $58M for 15 months of work
  • PH presses bid to keep rice import controls
  • PSEi continues to gain
  • Number of retrenched workers rose by 42% in ’13
  • PH seen to sustain rise in FDIs
  • Technology

  • DOF: Tagaytay, QC best at handling funds
  • Smart phone apps and sites perfect for the Holy Week
  • Tech company: Change passwords or suffer ‘Heartbleed’
  • Filling the digital talent gap
  • SSS to shut down website for Holy Week
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • Syria most dangerous country for journalists, PH 3rd—watchdog
  • Japan says visa-free entry still a plan
  • First Fil-Am elected to Sierra Madre, Calif. city council
  • UC Irvine cultural night to dramatize clash of values in immigrant family
  • Filipino sweets and info served at UC Berkeley Spring Fest
  • Marketplace