Japan’s inflation accelerated in November, driven by higher food and fuel prices and placing renewed pressure on the Bank of Japan (BoJ) to consider further interest rate hikes.
Government data released on Friday showed the nationwide consumer price index (CPI) rising by 2.9%, up 0.6% for the month amid persistently high rice prices and the phasing out of government subsidies on utility bills.
The data follows the BoJ’s decision on Thursday to maintain interest rates at 0.25%. The vote, however, saw hawkish board member Naoki Tamura advocating for a hike to 0.5%, citing growing inflationary risks.
The BoJ has already taken significant steps this year, ending its negative interest rate policy in March and raising its short-term rate to 0.25% in July.
Governor Kazuo Ueda has signalled the bank’s willingness to raise rates further if inflation, supported by domestic demand and wage growth, achieves the bank’s 2% target sustainably.
The Japanese yen extended five-month lows following the release, now 2.6% away from fresh 30-year lows as Japan’s interest rates continue to lag behind those of other major economies.
