Japan's July core consumer prices up 2.7% on higher energy costs
Inflation just continues on in Japan, but its probably the same everywhere in the world at this time.
The Bank of Japan has been trying to get inflation to the 2 percent level for many years without much success.
Some might think 1.9 percent is not that much except when its 1.9 every month it begins to add up over many months and many years, especially for low income and fixed income groups.
The Bank of Japan, while it might be trying it hasn't been very good at curbing inflation or slowing down inflation. But to be fair not much can really be down, as even in the US, while interests were increased, it might have not been a reason for the decrease in inflation.
The weak Japanese yen, is another challenge for the Bank of Japan to solve but so far it has been able to do much. The weak yen has some positives and negatives, but for the Japanese domestic the weak yen pushes up prices and Japanese importers have to pass-on their increased costs to the next in the supply chain, including the final retail customer.
Energy prices globally might be up, but Japan should try, if not yet, to enter into some FTA's with some energy producing countries as a way to reduce import energy prices, as Japan is resource poor country and has to import much of what it needs.
A 22.3 percent increase in electricity, this time of year, during the summer, is probably worse than a cold winter for most in Japan, as now Japanese households have to run their AC's a lot but, like a recent article said, many single family households and maybe many fixed income households have tried to not use their AC's that much to reduce expenses.
Food prices are another challenges for Japanese households and now, because of the news about a big earthquake has been mentioned a lot in the media there is now a shortage of rice in Japan and rice prices have skyrocketed as people have horded rice in the supermarkets.
And of course rice and other staples are subject to the growing season and if the growing season has some challenges such as a hot summer, the supply might be less, which means of course prices have gone up.
I doubt, to be fair, that increased consumption of rice by foreign visitors is/was enough to drive up rice prices in Japan, as most likely the not so good growing season was the biggest factor for the increase in rice prices, as the number of foreigners is increasing, is not enough to have an impact on the rice market in Japan.
And yes, maybe many Japanese households bought new AC's because of the summer heat, so maybe Yodobashi Camera, a big electronics company in Japan has had good sales this summer in AC's.
While the Bank of Japan might be considering a rate increase, recent articles have said the BOJ is probably going to wait until the financial markets, in Japan, and globally, calm down, as the US economy had some not so good news about its economy, but now it seems to be OK, but the BOJ is probably going to wait more.
Most likely, if there is a rate hike, it will be in October or November at the earliest, as even the hot summer is causing challenges for the Japanese economy, along with it being the typhoon season, which means more havoc for the Japanese economy.
The Bank of Japan never wants to upset the financial markets, so most likely they need to communicate what they are going to do with regards to a rate hike or decrease in the future.
The currency market is a different situation compared to the stock markets, both in Japan and globally, as the currency markets or markets usually are not as volatile except in this case the Japanese currency market, lately has been quite volatile.
The coming months are going to be very interesting as its the typhoon season, there are record hot temperatures in Japan this summer and the Japanese economy has not grown that much recently, and then add in the rice shortage, so the coming months will be interesting.
Have a nice day and be safe!
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