Ever since 2008, consumer prices in Japan have increased at the fastest pace in July 2013. The increase is the result of high energy costs. Japanese Prime Minister Shinzo Abe is responsible for the progress, as he pulled the economy out of 15-year deflation.
Except the prices of fresh food, consumer prices increased 0.7 percent compared to 2012. The statistics bureau in Tokyo said that the industrial output increased a less-than-forecast 3.2 percent from June 2013. Junko Nishioka, the chief economist at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan official said, “Japan is moving into real inflation. Today’s data is encouraging for the BOJ, and they are likely to keep monetary policy on hold.”
After the shutdown of nuclear reactors in the country, the energy costs went up. Moreover, the pledge of the central bank in April 2013 to double the monetary base over two years has weakened the yen. However, now the deflationary pressures are showing signs of improvement.
With those measures, prices fell 0.1 percent in July 2013, slowing down from 0.2 percent decline in June 2013. This week, Shinzo Abe has summoned about 60 economists, business leaders and representatives of consumers in order to discuss if there is a necessity to lift the sales tax.
Photo Credits: IB Times