Rice accounts for simply 0.62% of the Japanese client value index, Commerzbank’s FX analyst Volkmar Baur notes.
Inflation in Japan stands at 3.5% in Might
“Nevertheless, provided that rice costs have risen by over 100% previously 12 months, this has had a noticeable influence on general inflation. General, inflation in Japan stood at 3.5% in Might. Excluding rice, inflation can be beneath 3%. Whereas inflation stays excessive, excluding meals and vitality reveals that the inflation price in Might remained secure at 1.6%, throughout the Financial institution of Japan’s goal vary.”
“Nevertheless, the BoJ solely excludes contemporary meals and vitality to calculate its core price. As a result of different meals costs are additionally rising considerably, this price stays at 3.3%, which is above the BoJ’s goal. For my part, the BoJ shouldn’t reply to excessive meals costs, notably the rise in rice costs, by elevating rates of interest.”
“The answer is way more apparent. Whereas rice costs in Japan have greater than doubled lately as a result of poor 2023 harvest, export costs for Thai rice have fallen by over 36% previously 12 months. Due to this fact, it might be a lot simpler to carry the excessive import restrictions on rice to decrease costs, fairly than burdening the financial system with greater rates of interest.”
