This increase, which is the fastest in four decades, will likely support market expectations that the Bank of Japan (BOJ) might phase out its massive stimulus measures by changing its yield control policy.
The rise in Tokyo’s consumer price index (CPI), which excludes fresh food but includes fuel, beat the median market forecast of 3.8% and the 3.6% rise seen in November, according to government data on Tuesday.
The last time Tokyo inflation was faster was in April 1982, when the core CPI was 4.2% higher than the previous year.
Tokyo’s core CPI, which excludes fuel and fresh food, was 2.7% higher in December than a year earlier, up from the 2.5% annual gain seen. in November.
The rise in Tokyo’s CPI raises the odds that nationwide consumer inflation remained above the BOJ’s 2% target in December.
BOJ Governor Haruhiko Kuroda dismissed the possibility of a short-term interest rate hike, saying the bank must continue to support the economy until the current cost-driven inflation turns into a inflation due to demand, accompanied by a rise in wages.
But Japan’s long-term interest rates have risen since the BOJ surprised markets last month by widening the band around its 10-year bond yield target, a move investors saw as a prelude to a future. rate hike.
