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Japan April consumer prices post biggest jump in over 7 years -Breaking


© Reuters. FILEPHOTO: On December 6th, 2015, a shopper examines packs of vegetables in a Tokyo shopping area. REUTERS/Yuya Shino

By Daniel Leussink

TOKYO (Reuters – Japan’s core consumer inflation rose higher than the central banks’ 2% target. It reached a seven-year-high as increases in commodity and energy costs have prompted wider price rises, which are putting pressure on households.

As consumer prices rise, it is harder for Bank of Japan to convince markets it will keep its monetary policy extremely loose. This also fuels public worries about rising living costs.

According to government data, the nationwide core consumer price index, which does not include volatile fresh foods costs, rose 2.1% in April compared with a year ago, according to Friday’s government data.

It was the largest monthly rise since March 2015. This also matched the median forecast of Reuters.

As the effect of lower mobile phone fees from April, which has lowered overall CPI from then onwards starts to fade in comparisons with yearly data, this was an even stronger gain than the 0.8% annual increase in March.

In Japan, prices have risen at a slower pace than in other developed economies. This is due to slow wages growth and the difficulty for businesses to raise their prices.

As the BOJ continues to maintain its large monetary stimulus it seeks inflation stabilization at 2%. It does this despite strong wage growth and higher food and energy prices.