Underlying inflation in the Japanese capital hit its highest level in 2 years in March | The mighty 790 KFGO

By Yoshifumi Takemoto and Kantaro Komiya

TOKYO (Reuters) – Core consumer prices in Japan’s capital rose at the fastest annual rise in more than two years in March, propelled by soaring energy costs.

The relentless upward trend in global commodity prices after the war in Ukraine could ruin Japan’s fragile, import-dependent recovery from the pandemic, even as domestic COVID-19 infections decline and curbs on the social distancing are reduced, analysts say.

Tokyo’s core consumer price index (CPI), which excludes volatile fresh food but includes energy products, rose 0.8% year-on-year in March, the fastest pace since December 2019 and above the median market forecast for a gain of 0.7%.

It followed a 0.5% increase in February.

The measure of inflation in the Japanese capital is seen as a leading indicator of the national core CPI which is released about a month later.

A 26.1% rise in energy prices — the fastest annual growth in 41 years — pushed Tokyo’s core CPI up in March, the data showed.

Prices also increased for a wide range of items ranging from food to entertainment services.

In the overall reading that includes fresh food prices, Tokyo’s CPI in March rose 1.3% from a year earlier, hitting the highest since April 2019.

But the one-off effect of cuts in mobile phone charges caused the overall index to fall 1.08 points, it showed.

Even before Russia’s invasion of Ukraine, Bank of Japan policymakers expected core inflation to approach its rarely met target of 2%, according to the minutes of their meeting. January meeting released Thursday.

Japanese Prime Minister Fumio Kishida is expected to instruct his cabinet next week to draw up new relief measures, such as fuel subsidies and other measures for households, to protect the economy from new threats of rising prices. price of fuel and other goods.

(Reporting by Yoshifumi Takemoto and Kantaro Komiya; Editing by Sam Holmes)