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Japan's consumer prices rise on higher energy costs | Japan's consumer prices rise on higher energy costs |
(about 3 hours later) | |
Japan's consumer prices rose for the third month in a row in August, a boost for policymakers as they attempt to end years of deflation or falling prices. | Japan's consumer prices rose for the third month in a row in August, a boost for policymakers as they attempt to end years of deflation or falling prices. |
Consumer prices, excluding food, rose 0.8% from a year earlier. | Consumer prices, excluding food, rose 0.8% from a year earlier. |
The growth was mainly stoked by energy costs. Japan has been relying heavily on imports to meet energy demand after all its nuclear reactors were shut. | The growth was mainly stoked by energy costs. Japan has been relying heavily on imports to meet energy demand after all its nuclear reactors were shut. |
But a weakening yen, which has fallen nearly 25% against the US dollar since November, has made imports more costly. | But a weakening yen, which has fallen nearly 25% against the US dollar since November, has made imports more costly. |
The yen's decline has been triggered mainly by the aggressive policies unveiled by the new government, which includes a 2% inflation target, to try and revive the Japanese economy, | The yen's decline has been triggered mainly by the aggressive policies unveiled by the new government, which includes a 2% inflation target, to try and revive the Japanese economy, |
According to the statistical bureau's latest data, fuel, light and water prices rose 6% in August, from a year earlier. | According to the statistical bureau's latest data, fuel, light and water prices rose 6% in August, from a year earlier. |
If food and fuel are taken out, consumer prices actually fell 0.1% from a year ago. | If food and fuel are taken out, consumer prices actually fell 0.1% from a year ago. |
"The ongoing rise in inflation is still mostly a reflection of the slump in the exchange over the past year," said Marcel Thieliant, Japan economist with Capital Economics. | |
Reviving growth | |
Japan's economy has been mired by deflation for the best part of the past two decades. | |
The trend has been a big hurdle to its attempts to boost domestic consumption and has hurt its economic growth. | |
Falling prices hurt the economy as consumers and businesses tend to put off purchases in the hope of getting a cheaper deal later on. | |
Prime Minister Shinzo Abe, who came to power in December last year, has made reversing that trend a key part of his economic policy. | |
Japanese policymakers have unveiled a series of measures in recent months to try and trigger a fresh wave of economic growth. | |
These steps, which include doubling the country's money supply, have started to have some impact. | |
Earlier this month, Japan revised up its growth data for the April to June quarter, adding to hopes of an economic recovery. | |
The world's third-largest economy expanded 0.9% during the period, compared to the previous three months. That translates into an annualised growth of 3.8%. | |
The initial estimate of quarter-on-quarter growth was 0.6%. |
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