Japan’s core consumer price index rose 0.1 percent in fiscal 2005 from the previous year for the first increase in eight years, the government said Friday.
The core nationwide CPI, excluding perishables, came to 97.9 for the fiscal year that ended March 31, against the base of 100 for 2000, the Internal Affairs and Communications Ministry said in a preliminary report.
The annual core CPI last rose in fiscal 1998, with a 0.2 percent gain, after which it posted successive declines. It fell 0.2 percent in fiscal 2004.
The core CPI grew 0.5 percent to 97.9 in March from a year earlier, marking the fifth straight monthly expansion and logging 0.5 percent growth for the third month in a row.
The March advance failed to meet the average market projection of 0.6 percent growth, but the data fueled speculation that the Bank of Japan will raise the key short-term interest rate this summer for the first time in six years.
“We feel a rising trend in prices has been gaining ground,” a ministry official said.
Private-sector economists also see the latest data as foreshadowing a rising trend in consumer prices.
“The core nationwide CPI could have posted a rise of around 0.5 percent in fiscal 2005 from the previous year, given a dwindling supply-demand gap and a pickup in wages,” said Takuji Aida, chief economist at Barclays Capital Japan Ltd.
“But special factors, such as a reduction in fixed telephone fees, kept the growth down to 0.1 percent,” Aida said.
Commenting on the CPI data, economic and fiscal policy minister Kaoru Yosano voiced concern about inflation in the near future. “The time when we will have to be worried about price increases may come in six months or a year,” he said.
Chief Cabinet Secretary Shinzo Abe iterated, however, that “mild deflation” continues.
“Higher oil product prices are behind the CPI’s rise. We need to keep a close eye on whether the uptrend will continue,” Abe said.
According to the ministry, high crude oil prices pushed up prices of oil-related products, helping send the nationwide CPI back to positive territory in fiscal 2005.
Prices of gasoline surged 10.6 percent in fiscal 2005 from the previous year and those of kerosene jumped 27.9 percent.
Meanwhile, prices of laptop computers fell 26.8 percent and those of desktop computers dropped 27.4 percent, compared with their fiscal 2004 prices. Fixed telephone fees fell 8.2 percent.
In March, another measure of the nationwide CPI that excludes both food and energy prices grew 0.2 percent from a year earlier for the fourth straight monthly expansion.
This type of CPI is similar to indicators used in the U.S. and European countries, and some experts say this index better reflects the trend of price changes.
With perishables, food and energy prices included, the March CPI climbed 0.3 percent from a year before, the ministry said.
Meanwhile, the core CPI for Tokyo’s 23 wards, excluding perishables, increased 0.3 percent to 97.2 in April for the fourth straight monthly rise.