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TOKYO: Japan's core inflation rate accelerated to a new decade high of 1.9 per cent in June amid surging energy and food costs, the government said Friday.
It was the ninth straight monthly increase in consumer prices and the sharpest rise since March 1998.
Japan was stuck in a deflationary spiral for years, but the return of inflation has also been met with concern as it is being driven entirely by rising import costs rather than a stronger domestic economy.
The core inflation rate, which excludes volatile freshwater fish, saltwater fish, fruit and vegetable prices, picked up from an annualised 1.5 per cent in May, the Ministry of Internal Affairs and Communications said.
The figure for June matched market forecasts. Excluding energy costs, core consumer prices rose just 0.1 per cent. Overall prices were up 2.0 per cent.
Japan's economy is on the mend from a slump stretching back more than a decade, but analysts say rising energy and raw material costs along with weakening exports are putting the brakes on the recovery.
Despite the pick-up in inflation, analysts do not expect the Bank of Japan to raise its super-low interest rates from the current level of 0.5 per cent any time soon given the fragile health of the economy.
Core consumer prices in Tokyo, a leading indicator released a month earlier than the figures for the whole of Japan, rose 1.6 per cent in July after a gain of 1.3 per cent in June, the government reported.
- AFP/yb
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