Japan’s Inflation Spread to Biggest Share of Items Since 2001

Inflation in Japan is fast spreading to the largest share of items in two decades, as the Bank of Japan waits for wage growth to accompany a rise in prices.

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(Bloomberg) — Inflation in Japan is fast spreading to the largest share of items in two decades, as the Bank of Japan waits for wage growth to accompany a rise in prices.

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The proportion of items that saw price gains in Japan’s core consumer price basket climbed to 69.2% last month, the most in data going back to January 2001, according to a release from the central bank published Tuesday. 

The result is unlikely to persuade Governor Haruhiko Kuroda to change his easing stance. He’s repeatedly insisted that the current input-cost driven inflation needs to first turn more sustainable, backed by wage growth and a recovery from the pandemic.

Still, signs of widespread price increases are likely to keep fueling speculation over a pivot toward normalization. Bond traders and hedge funds are already betting that the BOJ will be forced to raise its 10-year yield ceiling or abandon its yield curve control framework altogether.

Tuesday’s report also showed the trimmed mean, another underlying price trend indicator, reaching a fresh high by rising 1.5%. 

Consumer prices excluding fresh food climbed 2.1% from a year earlier in May, with energy costs amplified by a weaker yen, according to a government report last week.