Japan prices jump on energy costs, industrial production down

Rising energy costs triggered the biggest jump in Japanese consumer prices in almost a decade while industrial production slumped, the government said Friday, clouding the outlook for the world’s No. 2 economy.

The nation’s jobless rate unexpectedly fell to 3.8 percent in November, but overall the mixed data cements expectations that the Bank of Japan will keep interest rates unchanged for some time, even as energy-fueled inflation accelerates.
“The rise in prices involves higher oil prices, and so it’s not a favorable increase,” economy minister Hiroko Ota told reporters.

The Bank of Japan has looked for a rise in consumer prices as a sign the country has fully emerged from years of deflation, a continuous spiraling down of prices that deadens economic activity and brings down wages.

Still, the central bank has been cautious to hike rates too quickly amid concerns over the U.S. subprime loan crisis and the possible impact of the global economic slowdown on Japan’s economy.

International Herald Tribune