Consumer prices in Japan rose at an annual rate of 3.4% in May, the fastest pace in 32 years, as the effect of the sales tax hike started to be felt.
Japan raised its sales tax rate from 5% to 8% on 1 April. The price growth in May follows a 3.2% jump in April and is a big boost for Japan’s attempt to trigger inflation.
Japan has been battling deflation, or falling prices, for best part of the past two decades and that has hurt domestic demand and stifled growth. The Japanese government has taken various steps over the past few months to try and reverse this trend, and the country’s central bank has set a target of a 2% inflation rate.
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