Kantaro Koiya, Yoshifumi Takimoto

TOKYO (Reuters – Core consumer prices rose in Japan’s capital at the fastest annual growth in over two years, in March. This was driven by rising energy costs.

Analysts warn that the unstoppable rise in commodity prices worldwide following the conflict in Ukraine may ruin Japan’s import-reliant recovery from the pandemic. However, domestic COVID-19 infection rates are decreasing and social distancing curbs have been reduced.

Tokyo Core Consumer Price Index (CPI), which does not include volatile fresh foods but also includes energy products, rose 0.8% in March. This is the fastest rate since December 2019, and more than the median market forecast of 0.7%.

The increase was 0.5% in February.

Japan’s capital inflation is a major indicator of nationwide core CPI, released approximately one month later.

According to data, a 26.1% rise in energy prices in March – which is the highest annual growth in 41-years – drove up Tokyo core CPI for March.

A wide variety of goods, from entertainment to food, saw their prices rise.

The overall Tokyo CPI reading, which includes fresh food prices and is inclusive of the March data, rose 1.3% from the previous year to reach the highest level since April 2019.

However, the index was still affected by the cut in cellphone charges. It took 1.08 off.

The minutes of their January meeting were released and showed that policymakers from the Bank of Japan expected core inflation to reach 2%, even prior to Russia’s invasion of Ukraine.

Fumio Kishida, the Japanese Prime Minister, will instruct his Cabinet next week to create new relief measures such as fuel subsidies for households to guard against rising fuel prices.