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

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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. 

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