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Japan Inflation December 2022

Japan: Inflation comes in at highest level in more than 31 years

Inflation edged up to 4.0% in December from Novembers 3.8%. December’s result marked the highest inflation rate since January 1991. All components of the consumer price index rose at a faster rate.

The trend pointed up, with annual average inflation coming in at 2.5% in December (November: 2.2%). Meanwhile, core inflation rose to 4.0% in December, from the previous month’s 3.7%.

Finally, consumer prices increased 0.18% over the previous month in December, slowing down from November’s 0.25% rise. December’s result marked the weakest reading since June.

Cost-push factors—a slumping yen and elevated commodity prices—pushed up inflation in December. These factors are expected to recede this year. Along with new measures announced in the supplementary budget, this should lead inflation to gradually fall until it dips below the BoJs 2.0% target in Q3 2023.

That said, there were signs that price pressures were beginning to broaden. Inflation excluding fresh food and energy prices rose to 3.0% in December, from 2.8% in November. If this continues and wage growth begins to pick up, that could lead to higher price pressures becoming sustained—a primary goal of BoJ Governor Kuroda, whose term expires in April.

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