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Tokyo core CPI up 4.0% in December, biggest rise since 1982

Figure tops BOJ's 2% inflation target for 7th straight month

Customers outside a Tokyo supermarket in October 2022. Core CPI for the capital is seen as an indicator of what to expect nationwide.   © Reuters

TOKYO (Kyodo) -- Core consumer prices in Tokyo rose 4.0% from a year earlier in December for the sharpest gain in over 40 years, in a fresh sign of broadening price hikes that hurt households and could add pressure on the Bank of Japan to tighten its policy, government data showed on Tuesday.

Tokyo's core consumer price index (CPI) excluding volatile fresh food items rose by the most since April 1982 when it gained 4.2%. The gauge, seen as an indicator of what to expect nationwide, was above the BOJ's 2% target for the seventh straight month.

In 2022, core consumer inflation accelerated 2.2% from a year earlier, topping the 2% threshold for the first time since 2014. Stripping away the price-boosting effects of past consumption tax hikes, it was the largest increase since 1992 when a 2.4% gain was reported, according to the Ministry of Internal Affairs and Communications.

A growing number of companies have been passing on higher costs of energy and raw materials to consumers in recent months, with Tokyo's core CPI up for the 16th straight month.

Japan initially saw higher fuel costs -- partly blamed on Russia's war in Ukraine -- as a reason to prompt the government to give subsidies to oil wholesalers to lower gasoline and kerosene prices.

Price hikes have since spread to other items, notably food, dealing a blow to consumers at a time when wage growth has not kept pace with accelerating inflation.

In December, prices of food other than perishables leaped 7.5% from a year earlier.

Fuel costs remained high, with gas in the city surging 36.9% and electricity up 26.0%.

Tepid wage growth is a major reason why the BOJ has stuck to its ultralow rate policy because it views higher pay as critical for the economy to withstand inflationary pressures.

The BOJ is considering raising its inflation outlook for fiscal 2023 and 2024, sources familiar with the matter said earlier.

Market speculation is persisting that the Japanese central bank will move toward tighter monetary policy after it made a surprise decision last month to expand the trading band for 10-year Japanese government bond yields, a step interpreted as a de facto rate hike.

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