(Bloomberg) -- Food inflation in Japan is a hot topic for households managing monthly budgets — and increasingly for the central bank as well, as prices for staples including rice and cabbage soar.
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The issue will gain fresh traction with Friday’s release of consumer inflation data forecast to show overall price gains picking up to 4% in January from 3.6% in December, according to consensus. That may boost pressure on the Bank of Japan to hike its benchmark rate at a faster pace than previously expected.
Cabbage prices at 2.6 times their five-year average are a particular problem for people like Katsumi Shinagawa, who manages a pork cutlet restaurant in Tokyo. Restaurants like his typically offer cabbage as an all-you-can-eat side dish served alongside the tonkatsu cutlets.
Nowadays, some people fill their stomachs with large servings of the vegetable before they tackle the main dish, Shinagawa said. The costs hurt, but he said he’ll be patient as long as customers continue to flow in. At the same time, he sometimes wonders which is now the side dish, as the price of cabbage has risen to almost the same level as pork.
“It’s like pork and cabbage are competing with each other,” Shinagawa said. “I never in my life imagined this would happen.”
The 4% figure would reaffirm Japan’s status as the Group of Seven country facing the fastest inflation, contrasting sharply with its decades-long reputation as a nation stuck in a deflationary rut. The gauge that removes fresh food is expected to show price growth of only 3.1%, widening the gap between the overall data and the core figure to the most since 2016.
Central banks tend to focus on the core figure as a guide to policy in part because food prices affected by everything from the weather to labor shortages are hard to address via interest rates. Also, those trends are often temporary.
Still, BOJ Governor Kazuo Ueda seems to be paying closer attention to food. He said last week he will keep food inflation in mind when conducting monetary policy, as it may not be temporary and could affect consumers’ inflation expectations.
The level of fresh food prices has risen 71.9% since 2010, about five times more than that of inflation excluding it. The price of rice rose 90% from a year earlier in the week through Feb. 9, the agriculture ministry reported Tuesday.