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Tokyo inflation up as Japan's government tries to beat deflation

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Tokyo inflation up as Japan's government tries to beat deflation

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Inflation in Japan’s capital Tokyo jumped to a 22-year high in April. Core consumer prices were up 2.7 percent from a year earlier.

However much of that was due to an increase in sales tax that came in at the start of the month.

Without the tax hike, prices rose by a much more modest 1.0 percent on the year, the same pace as in March.

The Japanese government is trying to pull the country out of years of deflation – that is where people delay making major purchases on the basis that prices will fall in the future.

Economists expect Japan’s central bank will have to do more to stimulate growth.

“Higher consumer inflation will erode consumers’ purchasing power in the coming months as wages are unlikely to pick up as much, putting a lid on consumption,” said Naoki Iizuka, an economist at Citigroup Global Markets Japan.

with Reuters