Fastest Japan inflation since ’08 stokes wage pressure:

Japan’s inflation accelerated to the fastest pace since 2008 last month, bringing the rate closer to policy makers’ target while threatening to erode household spending power unless employers boost wages.

Prices excluding fresh food rose 1.2% from a year earlier, the statistics bureau said today in Tokyo, more than a median forecast of 1.1% in a Bloomberg News survey of economists. A separate report showed industrial output rose 0.1% from October, less than forecast, in a risk for projections of an acceleration in economic growth this quarter.

Today’s data raise the stakes for employers girding for annual wage negotiations, with Prime Minister Shinzo Abe calling on them to boost salaries by more than the increase in the cost of living. Separate figures showed signs of a pickup in the labor market, with one job for every applicant -- the most since 2007.

“The rate of price rises will allow the unions to push for higher wages,” said Masamichi Adachi, a senior economist at JPMorgan Chase & Co. in Tokyo and a former central bank official. At the same time, “they may temper their demands because of concerns about keeping jobs -- so it’s difficult to see meaningful wage hikes.”

Japan is now past the halfway point to the central bank’s 2% inflation target, as a weaker yen and higher costs of energy spur broader price increases. The government dropped a reference to deflation in a monthly economic report this week for the first time in four years. Wages excluding bonuses and overtime were unchanged last month from a year earlier, ending a 17th-month slide, separate data showed today.

Falling Yen

The yen weakened after the data were released, falling to 105 against the dollar for the first time since October 2008, and was trading up 0.1% at 104.75 at 3:44 p.m. in Tokyo.

Prices of consumer durables such as refrigerators and televisions rose for the first time since 1992, increasing 0.3% last month from a year earlier.

Food prices rose 1.9% in November from a year earlier helping to boost the overall consumer price index by 1.5%, according to today’s CPI release.

Kappa Create Holdings Co. increased the price of sushi plates at its restaurants to 105 yen ($1) from 92 yen because of the higher cost of fish stemming from a weaker yen, the Nikkei newspaper reported on Dec. 23.

“It’s hard to say this is good inflation,” said Azusa Kato, an economist at BNP Paribas SA in Tokyo. “The prices that have risen are related to the weakening yen, and the gains aren’t fueled by wage increases.”

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