Annual Inflation in Japan Reaches 3% for First Time Since 1991

TOKYO (Sputnik) - Japan's inflation rate reached 3% in September for the first time since 1991, the Japanese Ministry of Internal Affairs and Communications said on Friday.

The 3% level exceeds the inflation target of 2% set by the Bank of Japan. A 3% rise in prices was last recorded in Japan in 1991.

The prices in Japan have been rising for 13 months in a row. The increase is mainly caused by rising prices for energy resources, which Japan is forced to import in great amounts, and the low exchange rate of the yen, the Japanese national currency, against the US dollar. The price of the yen was fluctuating between $150.14 and $150.17 on Friday morning. The threshold of 150 yer per US dollar was crossed on Thursday.

According to a poll held by Tokyo Shoko Research, the structure of Japan's economy makes a low exchange rate unprofitable for Japanese companies. At 143 yen per US dollar, over 54% of Japan's companies said that it has a negative impact on their business, while only 2.5% said that the low exchange rate positively affects their operations.

1000 yen bills and 10,000 yen bills spread out on a table.

© Flickr / Japanexperterna.se

The main reason for the continuing decline in Japan's national currency is a strong difference in the approach of the US and Japanese central banks to monetary policy. The US Federal Reserve continues to raise the key rate, while the Bank of Japan keeps it at a negative level.

The yen has been in steady decline since the summer. The decline accelerated in September, prompting the government to intervene after the exchange rate tumbled to 145.9 per dollar and buy out 2.8 trillion yen, a record amount for a single intervention.

Since the beginning of the year, many countries, including Japan, have been facing accelerating inflation, caused in part by Western sanctions against Russia over its military operation in Ukraine.