By Takahiko Wada and Leika Kihara

TOKYO, Reuters – Japan’s core consumer price index rose 0.5% to November, compared with a year ago, according to government data. This is a clear sign of the global fallout from commodity price inflation.

Analysts believe that the Bank of Japan won’t be forced to reduce monetary stimuli anytime soon because inflation is still far from its 2% target.

A nationwide increase in the core consumer price index (CPI), which includes volatile fresh foods but does not include oil prices, was greater than the 0.4% growth that was predicted by the median market.

This was the largest increase in prices since February 2020, and it followed an October 0.1% rise.

From a year ago, the so-called “core-core” inflation index (which excludes food prices as well as energy prices) fell 0.6% in November.

Japan was not spared from commodity inflation. In November, wholesale prices increased by 9.0% compared with a year before.

However, core consumer inflation is still below zero. Firms are cautious in passing costs on to customers as they fear that consumers may not spend enough.

Last week, the BOJ kept an extremely loose interest rate policy. Governor Haruhiko Kuroda reiterated his willingness to maintain low rates, even though other central banks are looking for exits from crisis-mode stimuli measures.

Japan has been slower than other countries to recover from last year’s economic pandemic. Japan’s GDP shrank an annualized 3.6% between July and September, due to weaker consumer spending and lower output. This was due to a surge in coronavirus and supply constraint infections.