Japan’s inflation accelerated to the fastest pace since 2008 in August on higher energy costs, underscoring pressure on Prime Minister Shinzo Abe to drive wage increases as he seeks to end 15 years of deflation.
Consumer prices excluding fresh food increased 0.8 percent from a year earlier, the statistics bureau said today in Tokyo. The median forecast of 30 economists surveyed by Bloomberg News was for a gain of 0.7 percent. Stripping out energy and perishables, prices fell 0.1 percent.
The yen’s 20 percent slide against the dollar in the year through August pushed up fuel costs. While the data point to early success for Abe, a sales-tax increase scheduled for April will add to the burden on households and risk dragging on the nation’s economic rebound. Abe is set to announce a decision on the levy on Oct. 1.
“Without pay increases, households’ purchasing power will weaken gradually,” said Taro Saito, director of economic research at NLI Research Institute in Tokyo. “Abe will have to keep up his campaign on companies for wage growth.”
The Topix index slipped 0.1 percent at 10:08 a.m., while the yen climbed 0.1 percent to 98.93 per dollar.
Gasoline prices rose this month to the highest since 2008, according to the industry ministry. The nation’s last operating nuclear reactor was halted for maintenance on Sept. 15, leaving Japan without atomic power for the first time since July 2012, and more dependent on imported fuel.
Abe last week began meetings with business and trade union leaders to press his case for wage increases, key to the success of his effort to spur growth under his economic policies dubbed Abenomics.
Salaries in July extended the longest slide since 2010, with regular wages excluding overtime and bonuses falling 0.4 percent from a year earlier, a 14th straight drop.
Rising prices in the absence of higher incomes have dented consumer sentiment, which could undermine consumption.
Consumer confidence fell in August for a third consecutive month, and sentiment among merchants declined for a fifth month.
Bank of Japan Governor Haruhiko Kuroda said last week the economy is moving “smoothly” to reach a 2 percent inflation target that the central bank aims to achieve within about two years with its unprecedented monetary easing.
Mos Food Services Inc., said this week it would raise the price of hamburgers at its Mos Burger restaurants for the first time in five years.
Yakult Honsha Co., a maker of fermented milk products, said on Sept. 10 it would replace one of its drinks with a new version that costs 14 percent more, its first price increase in 22 years.
The core CPI could rise 1 percent on year at the end of 2013 as the sales-tax increase encourages consumers to front-load spending, said Azusa Kato, senior economist at BNP Paribas SA in Tokyo, before the data were released.
Japan’s finance ministry plans to resume selling inflation-linked bonds next month after a five-year hiatus.
Shuichi Obata, senior economist at Nomura Securities Co. said he expects a moderate increase in consumer prices, as the boost from energy costs is expected to fade.
“Inflation alone won’t ever be pleasant for households,” Obata said. “Abe must be feeling pressure to make companies raise wages as prices climb, especially when a sales-tax hike is in sight.”
The sales tax is set to rise to 8 percent from 5 percent now, pending Abe’s decision next week. The prime minister has ordered his government to compile a stimulus package to offset the blow to the economy. After the levy was last increased in 1997, Japan’s economy fell into recession.