By Leika Kihara
TOKYO (Reuters) -Japan’s consumer inflation could briefly approach the central bank’s 2% target as geo-political risks push up energy costs, a central banker said on Thursday in a sign of the broadening fallout from the crisis in Ukraine.
But Bank of Japan (BOJ) board member Junko Nakagawa reiterated the bank’s resolve to keep monetary policy ultra-loose, stressing that wages need to rise in tandem with inflation for such price rises to be sustainable.
“For the time being, inflationary pressure will remain strong, mainly for energy, food and industrial goods,” Nakagawa said in a speech, adding that year-on-year growth in core consumer prices may “briefly rise close to 2%.”
“Even if that happens, what’s important is to scrutinise the factors (driving up prices) and whether Japan’s economic fundamentals are strong enough to make such price rises sustainable,” she said.
While soaring raw material costs have pushed up wholesale prices in Japan, core consumer inflation stood at 0.2% in January as weak household spending and wage growth keep firms from passing on the higher costs to consumers.
(Reporting by Leika KiharaEditing by Chang-Ran Kim and Sam Holmes)
