BoJ hikes inflation forecast on soaring energy prices

BoJ hikes inflation forecast on soaring energy prices

TOKYO: Japan’s central bank hiked its full-year inflation forecast on Thursday but cautioned that it sees rising prices, driven by a surge in commodity costs caused by the Ukraine war, as a temporary and volatile trend. Despite climbing prices and a slump in the yen to a 20-year low against the dollar, the Bank of Japan left its ultra-loose monetary policy unchanged.

It revised its inflation projection for the 2022-23 financial year to 1.9 percent-sharply up from its previous 1.1 percent forecast. The figure, which excludes fresh food, is just below the bank’s longstanding two-percent target but the BoJ views recent rises as a short-term trend and is calling for continued efforts to achieve sustainable economic growth. Consumer prices are “likely to increase temporarily to around two percent-due to the impact of a significant rise in energy prices-in fiscal 2022”, it said.

“However, the rate of increase is expected to decelerate, because the positive contribution of the rise in energy prices to the CPI (consumer price index) is likely to wane.” In March, core consumer prices rose 0.8 percent-the fastest increase in more than two years-as oil prices soared. Excluding energy, however, prices were down 0.7 percent.

Although the bank’s revised inflation forecast is