Energy and Weak Yen Boost Inflation in Japan

Japan’s consumer prices rose for the third month in a row in August, a boost for policymakers as they attempt to end years of deflation or falling prices.

Consumer prices, excluding food, rose 0.8% from a year earlier.

The growth was mainly stoked by energy costs. Japan has been relying heavily on imports to meet energy demand after all its nuclear reactors were shut.

But a weakening yen, which has fallen nearly 25% against the US dollar since November, has made imports more costly.

The yen’s decline has been triggered mainly by the aggressive policies unveiled by the new government, which includes a 2% inflation target, to try and revive the Japanese economy,

According to the statistical bureau’s latest data, fuel, light and water prices rose 6% in August, from a year earlier.

If food and fuel are taken out, consumer prices actually fell 0.1% from a year ago.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza