The consumer price index rose 0.6 percent in May from the previous year, marking its biggest growth since March 1998, the government said Friday, providing further evidence that the economy is moving out of deflation.
The core nationwide CPI, excluding perishables, came to 98.5 in May against the base of 100 for 2000. The rise marked the seventh-consecutive monthly increase, the Internal Affairs and Communications Ministry said in a preliminary report.
The increase matched the average market projection of a 0.6 percent rise.
The result is expected to encourage the Bank of Japan to explore opportunities for ending its zero-interest rate policy in the summer, possibly in July.
The government data showed high crude oil prices were behind the 0.6 percent increase in the core CPI.
Prices of oil-related products soared 11.1 percent in May from the previous year, pushing up the core CPI by 0.39 percentage point.
It compares with the CPI data for April when oil-related product prices rose 9.1 percent and contributed a 0.32 percentage point rise in the core CPI, which rose 0.5 percent overall from a year earlier.
“It is obvious that oil-related products pushed up the core CPI as a whole,” a ministry official said.
Prices for regular gasoline gained 9.4 percent in May from a year earlier and those for kerosene jumped 26.4 percent.
In contrast, prices for education and entertainment durable goods, which include personal computers, slipped 8.9 percent.
Separate data backed up the government figures.
Excluding food and energy prices, the nationwide CPI inched up 0.1 percent in the reporting month from the prior year. Although the index rose for the sixth consecutive month, the margin of increase shrank from 0.2 percent in each month from February to April.
The CPI, excluding food and energy prices, is similar to indicators used in the United States and European countries, and some experts say this index better reflects price change trends.
But some private-sector economists said an uptrend in prices is also seen in other products and services.
Takuji Aida, chief economist at Barclays Capital Japan Ltd., said recreational goods and personal effects are now under price-rise pressure, and this suggests the economy is pulling out of deflation, despite high oil prices.
“An uptrend in consumer prices is expected to continue as improvement in employment conditions spells wage hikes, which boost personal spending,” Aida said.
Including perishables, the nationwide CPI rose 0.6 percent in May from the prior year.
The core CPI for Tokyo’s 23 wards rose 0.3 percent to 97.3 in June for the sixth-straight monthly increase. Consumer prices in Tokyo are seen as the leading indicator of prices nationwide.
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