Japan April core CPI rises to 23-year high after sales tax hike

A woman looks at t-shirts in a clothing retail store at Ginza shopping district in Tokyo on April 25, 2014. -- PHOTO: REUTERS
A woman looks at t-shirts in a clothing retail store at Ginza shopping district in Tokyo on April 25, 2014. -- PHOTO: REUTERS

TOKYO (Reuters) - Japan's core consumer prices jumped 3.2 per cent in April from a year earlier, government data showed on Friday, the fastest gain since February 1991 as an increase in Japan's national sales tax boosted prices across the board.

The increase in the core consumer price index, which excludes volatile fresh food prices but includes oil products, compared with economists' median estimate for a 3.1 per cent rise, the Ministry of Internal Affairs and Communications said.

That followed a 1.3 per cent increase in March, posting the 11th straight month of annual gains.

The Bank of Japan estimates that the sales tax hike - to 8 per cent from 5 per cent that took effect on April 1 - will add 1.7 percentage points to Japan's annual consumer inflation in April, and 2.0 points from the following month. The internal affairs ministry does not provide official estimates.

The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, rose 2.3 per cent in April from a year earlier, the fastest annual gain since December 1997.

Core consumer prices in Tokyo, available a month before the nationwide data and seen as a leading indicator of nationwide inflation, rose 2.8 per cent in May from a year earlier, posting the quickest rise since April 1992.