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Japanese inflation hits five-year high
by Dylan Lobo on Sep 27, 2013 at 07:52
There were fresh signs Japan is winning its 15-year battle against deflation as consumer price inflation hits its highest level since 2008.
The country's core inflation measure, which excludes some fresh foods, rose from 0.7% in July to 0.8% in August.
The reading, the highest since November 2008, came in ahead of consensus forecasts of an unchanged figure.
The rise was largely due to the combination of high energy prices and a weaker yen, which raised the price of imports.
The inflation rate for services where imports plays a far more marginal role was just 0.1%.
Capital Economics indicated this, along with the fact 'core-core' inflation - which excludes all food and energy most of which is imported - remains negative, suggests Japan still has some way to go before it conquers deflation.
Capital's Singapore-based Japan expert Marcel Thieliant said in a note: 'We expect goods inflation to increase further towards 2-2.5% by year end, which should lift overall inflation above 1%.
'However, our measure of "synthetic import prices", which is based on the yen and key commodity prices, and our forecasts for the coming months, suggests that import price inflation is likely to slow soon. Spare capacity remains ample. Higher inflation rates are therefore unlikely to last for long.'
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