In March, Japan saw its rate of inflation rise to the highest level seen in 40 years as food and electricity showed especially severe increases, according to new government data just released.

Japan’s core consumer price index (CPI), which excludes fresh food, but does include energy, rose 3.1% in March, compared to one year ago. The reading had held steady from the previous month. However it was significantly below January’s 4.2% as a result of government subsidies which had been designed to ease the burdens placed on households by utility bills.

If both food and energy were excluded from the reading, inflation came in at 3.8% in March compared to February’s 3.5%. That marks ten months in a row that inflation has come in well above the Bank of Japan’s 2% target rate.

Overall, energy prices, including electricity, were up 12.8%.

Inflation rose at a pace not seen since since 1981, when the Middle East oil crisis caused a tremendous spike in fuel costs. Japan News quoted an official from the Internal Affairs Ministry as saying, “Food price hikes are expected to continue at least until around June.”

Mizuho Research & Technologies, an economic think tank, predicted that core CPI will continue to increase by 3% year over year for the coming months, and real wages will remain negative until the second half of 2023.

Kazuo Ueda, the new governor of the Bank of Japan, has sworn to keep monetary policy “ultra-loose,” so that companies will increase wages. The governor has indicated it is his intention to continue that policy until strong evidence arises indicating that inflation has become sustainable, and is being demand-driven, rather than by pressures on supply.

As global commodity prices have skyrocketed, it has placed pressure on Japanese companies, who have then passed those higher costs on to consumers in the form of higher prices.

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