The Week In Hindsight, 29 November 2013
Consumer price gages in the world’s third largest economy hit the positive end of the scale this week as nationwide Core CPI, which excludes fresh food, rose by 0.9% throughout the previous month. Bloomberg’s Japan Consumer Price Index (Excluding both fresh food and energy) confirmed prices increased within the economy but by an annualised rate of 0.3%.
The move in the Bloomberg CPI figure is important for Japan as it is one of the few measurements to strip out the cost of both fresh food as well as energy prices.
Energy costs have a big impact upon inflation in all economies however in Japan these have lead to artificial price inflation over recent months as the country presently relies upon energy imports which grow more expensive by the day as the local currency continues to weaken. This is because the country remains without Nuclear Power due to the Fukushima disaster following the Tsunami in 2011.
A contorted picture of economic progress can emerge if such price pressures are taken into account without due regard being given to whether or not they derive from improving momentum within the economy or other factors entirely.
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