Japan on Friday posted its first increase on the consumer price index (CPI) in 25 months after price rises created largely by the March 11 earthquake were passed on to the public.
Supply line disruption, product shortages, rising global energy costs and increasing food prices were major contributors to Japan’s return to inflation after more than two years. The CPI increased by 0.6 percent.
In better circustances, the news would be welcomed by a country that has battled deflation for more than a decade amid dour economic circumstances exacerbated by the Lehman shock of late 2008 had a huge impact on Japan. Finance Minister Kaoru Yosano, however, said the increase was not likely to lead to sustained gains.
A separate report released Friday showed that retail sales have fallen by 4.8 percent year on year, underlining the impact of the earthquake, and reinforcing economists’ expectations that Japan will post a third quarter of GDP contraction in the April-June period.