The government of Japan released data revealing that consumer prices in the country rose by 3.1% in March, which is the same percentage as the previous month. Although inflation is above the government’s 2% target, the Bank of Japan considers this to be temporary and has declined to raise interest rates as other developed economies have done.
Although the index shows inflation slightly above the government’s forecast (+3%), there has been a slowdown compared to the 4.2% recorded in January, which was the highest figure since September 1981. The data show that the price increase is due to the cost of processed food, gas bills, transportation, and telecommunications.
Importantly, the Bank of Japan considers inflation to be temporary, meaning that it does not intend to raise interest rates at this time. Unlike other developed economies that have raised interest rates to control inflation, the BOJ has maintained its stance and stated that it will continue to monitor the situation closely.
Overall, although inflation in Japan has exceeded the government’s 2% target, the BOJ does not consider this to be a long-term concern and has decided not to take action to control it. However, this could change if inflation continues to rise.