Japanese inflation rises as central bank weighs rate increase

{"text":[[{"start":7.24,"text":"Japanese inflation accelerated in July as the impact of higher oil and commodity prices passed through to consumer goods, deepening the challenge for the Bank of Japan as it weighs the risks of raising interest rates next month."}],[{"start":19.92,"text":"“Core-core” inflation, a critical gauge of consumer prices that excludes volatile fresh food and energy prices, rose to 1.9 per cent in July on a year earlier, strengthening for the first time in nine months."}],[{"start":32.52,"text":"Data released on Friday also showed core inflation, which only strips out fresh food, climbed to 1.8 per cent last month on a year earlier, up from 1.6 per cent growth in June."}],[{"start":44.24,"text":"Overall inflation rose from a pace of 1.6 per cent in June to 1.9 per cent in July, as “naphtha-flation” increased costs of everyday goods and highlighted Japan’s exposure to elevated prices for energy and petrochemicals as a result of the war in the Middle East."}],[{"start":60.22,"text":"The combination of shortages and rising prices of naphtha, an oil derivative used in plastics and manufacturing, has pushed up costs of detergent, plastic bags and other consumables."}],[{"start":null,"text":"

"}],[{"start":71.24,"text":"Economists said Friday’s inflation numbers, which were closely in line with market expectations, would reinforce speculation that the BoJ would opt to raise its policy rate by about 0.25 percentage points to 1.25 per cent at its September meeting."}],[{"start":86.04,"text":"The BoJ is focused on keeping inflation at “around 2 per cent”. Some economists have accused it of falling behind the curve as inflation has picked up."}],[{"start":95.12,"text":"“The BoJ’s normalisation process has now come a long way,” said Krishna Bhimavarapu, Asia-Pacific economist at State Street Investment Management, who forecast a rate increase in September. “Economic momentum is getting better, and the naphtha-flation pass-through is evidence of how inflation and price expectations are developing.”"}],[{"start":113.96,"text":"He added: “It’s a very different economy.”"}],[{"start":116.52,"text":"Market expectations put a 70 per cent chance on a September rate rise, with many speculators betting that the central bank is under pressure to raise rates in support of the government’s intervention in currency markets."}],[{"start":127.68,"text":"In July, with the yen at its weakest level against the US dollar in almost four decades, Japanese authorities stepped in and conducted a joint intervention with the US that amounted to about $85bn."}],[{"start":null,"text":""}],[{"start":140.8,"text":"The yen surged but has since crept back to about ¥159 versus the dollar."}],[{"start":146.76,"text":"Traders in Tokyo said the yen was also being supported to an extent by expectations that the BoJ would raise rates in September and might do so again in December."}],[{"start":156.38,"text":"The pressure was on the BoJ to move ahead of schedule or risk being blamed for a sudden drop if it disappointed the market, said one trader."}],[{"start":164.64,"text":"The BoJ raised rates to 1 per cent in June — a landmark in its process of “normalisation” after decades of ultra-loose monetary policy."}],[{"start":173.74,"text":"Until June, market economists held that the BoJ would not accelerate its rough schedule of raising interest rates by a quarter percentage point every six months. That put it on track to move again at the October or December meetings."}],[{"start":186.48,"text":"The BoJ has also contributed to shifted market expectations of the timing of its next rate rise by striking a hawkish tone."}],[{"start":194.44,"text":"At a meeting in July, the central bank’s Monetary Policy Committee voted to keep rates on hold, but in its accompanying outlook statement, it noted that the “core” CPI index was likely to accelerate to a level “clearly above 2 per cent” from the second half of the fiscal year ending in March 2027."}],[{"start":216.08,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1787302829_1070.mp3"}