TOKYO - Japan’s inflation accelerated at its fastest pace since 2008 last month, taking the rate closer to policymakers’ target while threatening to erode household spending power unless employers increase wages.
Prices excluding fresh food rose 1.2 percent from a year earlier, the statistics bureau said Friday in Tokyo, more than a median forecast of 1.1 percent in a Bloomberg News survey of economists. A separate report showed industrial output rose 0.1 percent from October, less than forecast, in a risk for projections of an acceleration in economic growth this quarter.
Friday’s data raise the stakes for employers preparing for annual wage negotiations, with Prime Minister Shinzo Abe calling on them to increase salaries by more than the increase in the cost of living. Separate figures showed signs of a pickup in the labor market, with one job for every applicant - the most since 2007.
“The rate of price rises will allow the unions to push for higher wages,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo and a former central bank official. At the same time, “they may temper their demands because of concerns about keeping jobs - so it’s difficult to see meaningful wage hikes.”
Japan is now past the halfway point to the central bank’s 2 percent inflation target, as a weaker yen and higher costs of energy spur broader price increases. The government dropped a reference to deflation in a monthly economic report this week for the first time in four years. Wages excluding bonuses and overtime were unchanged last month from a year earlier, ending a 17-month slide, separate data showed Friday.
Prices of consumer durables such as refrigerators and televisions rose for the first time since 1992, increasing 0.3 percent last month from a year earlier.
Food prices rose 1.9 percent in November from a year earlier helping to raise the overall consumer price index by 1.5percent.
A 14.6 percent increase in the cost of overseas package tours contributed to an acceleration in price gains of leisure services, Friday’s data showed.
All Nippon Airways Co. will raise ticket prices on domestic flights in March by as much as 9 percent because the weaker yen is raising fuel costs.
The Bank of Japan’s governor, Haruhiko Kuroda, who began record easing in April, said this week that core inflation is expected to hover at slightly above 1 percent through the first half of 2014. The Bank of Japan will maintain stimulus until core inflation is stable at about 2 percent, he has said.
Deputy Economy Minister Yasutoshi Nishimura said in an interview Friday that it “may be difficult” to declare an end to deflation during 2014.
Abe has held meetings with business and union leaders since September in a campaign to persuade companies to raise wages. Negotiations around March between trade unions and management known as “shunto” - or the spring wage offensive - will be key for pay increases.
Honda Motor Co. Executive Vice President Tetsuo Iwamura said on Dec. 13 that the Japanese automaker will set pay based on reaching profitability targets, rather than government directives on how fast to increase compensation.
Retail sales rose more in November than economists projected, marking a fourth straight increase, other data released Friday showed. The climb may be due to spending ahead of a 3-percentage-point sales-tax increase that takes effect in April.
Business, Pages 31 on 12/28/2013