Econintersect: Consumer prices in Japan rose at the fastest rate in 15 years in 
October 2013. Core inflation (excluding fresh food) rose by 0.9% year-over-year. Also excluding energy (as well as fresh food) the CPI rose by 0.3%, the first rise in five years. This also was a 15-year high. Further encouraging data was released for factory output which increased for the second month in a row (+0.5%). Japanese forecasters are predicting continuing factory output growth for the rest of the year, according to Reuters.
The overall inflation rate was 1.1% year-over-year, the third month in a row that the number had exceeded 1%. The dominant component in the overall number was energy which has been escalating in cost with the increased dependance on foreign fossil fuels in the aftermath of Japan shutting down its nuclear reactors and the recent devaluation of the yen.
The following table from Japan Statistics Bureau gives the data summary. Red circles were added by Econintersect.
The inflation rate is still well below the government’s 2% target but the outlook is positive, according to Hidenobu Tokuda, economist at Mizuho Research Institute, quoted by Reuters:
“We expect core inflation to approach 1 percent at the end of this year and then to rise more gradually next year.
“We are making progress toward ending deflation.”
The following graph from Trading Economics shows the recent history of the overall inflation rate (October data not yet included):
Sources:
Japan 2013 Consumer Price Index (Japan Statistics Bureau, Ministry of Internal Affairs and Communications, 29 November 2013)
Japanese inflation data offer fillip to Abe (Jennifer Thompson and Ben McLannahan, Financial Times, 29 November 2013)
Japan inflation accelerates, output points to recovery (Leika Kihara and Tetsushi Kajimoto, Reuters, 28 November 2013)
Japan Inflation Rate (Trading Economics, 29 November 2013)
