Japan's consumer prices up 0.8% in August, biggest increase in 5 yrs

Japan's consumer prices rose 0.8 percent in August from a year earlier on higher gasoline and other energy prices, posting the highest margin of increase since November 2008, government data showed Friday.

The core consumer price index, excluding fresh foods, stood at 100.4 against the 2010 base of 100, the Ministry of Internal Affairs and Communications said. It registered the third straight month of increase.

A ministry official said the index is likely to stay in positive territory in the coming months, though effects of rising energy prices may ease to some extent.

The ministry said that in addition to rising energy prices, a narrower margin of decline as well as an increase in some durable goods pushed up overall prices in August.

Prices of recreational durable goods including televisions rose 0.1 percent, entering positive territory for the first time since January 1992.

Gasoline prices surged 13.2 percent, while electricity prices increased 8.9 percent. Among other durable goods, prices of notebook computers rose 9.3 percent and those of air conditioners were up 1.7 percent.

Referring to the data, Masahiko Hashimoto, an economist at the Daiwa Institute of Research, said the rise in the core CPI, up from a 0.7 percent increase in July, was largely attributable to higher energy costs, and that Japan can beat its chronic deflation only when the index remains in positive territory without the influence of high energy prices.

"As material costs rise due to effects of a weakening yen, companies are moving to pass on rising costs to their final products," Hashimoto said.

Despite the rising prices, a majority of economists believe it will be difficult for the Bank of Japan to achieve a 2 percent inflation target in about two years.

According to the ministry, the CPI excluding food and energy prices fell 0.1 percent in August.

The core CPI for Tokyo's 23 wards in September, which indicates nationwide price moves down the road, rose 0.2 percent to 99.5, marking the fifth straight monthly gain.

The rate was slower than a 0.4 percent gain in the previous month due chiefly to a smaller increase in energy prices.