By Kantaro Komiya

TOKYO (Reuters – Core consumer prices for Tokyo in November were at their highest level in over a year. It is a strong indicator that Japan’s inflation rate has been rising, according to a Reuters poll. The result could be a sign that companies are beginning to transfer higher energy costs and raw material costs.

In Japan, the core consumer price indicator (CPI), which measures energy prices but does not include fresh food prices, increased 0.4% from October to November. It was the fastest rate of change since July 2020 according to 17 economists polled. In October, Tokyo’s core CPI Index rose 0.1%.

Even though such data could suggest an uptake in Japan’s national core CPI, it was still below the central bank’s target of 2%.

Takeshi Minami of Norinchukin Research Institute, chief economist said that Japan is not experiencing a sudden rebound in consumer demand, unlike the United States and Europe. The inflation rate is likely to increase, but at a moderate pace.

Japan is expected to see an increase in consumer inflation in the coming months, despite rising fuel prices. However, it will not rise as fast as other countries because weak household spending dissuades firms from increasing their prices.

Haruhiko Kuroda, Governor of Bank of Japan, stated Monday that inflation would accelerate to approximately 1% by the second half of 2022 as economic recovery takes place to levels pre-pandemic.

However, inflation will remain well under the BOJ target. This suggests that the central bank is unlikely to keep its monetary policy loose.

On Nov. 26, the government will publish November Tokyo CPI data at 8:30 AM (Nov. 25, 2330 GMT).