Title: Japan's inflation not mainly caused by weak yen, ADB's Asakawa says

Jul 29, 2022 03:25AM ET

By: AnalysisWatch

Japanese Development Bank (ADB) Governor Masatsugu Asakawa said on Friday that it was too farfetched to claim that the weak yen was the main reason for Japan's price rise.

He said the main factors for the price rise in Japan are supply chain disruptions caused by the pandemic and higher food and energy prices due to Russia's invasion of Ukraine.

Rising consumer prices are a politically sensitive issue in Japan as it challenges the Bank of Japan's (BoJ) view that the country's recent price increases will remain somewhat temporary.

They may also cause discontent, especially among low-income earners who are concerned about the rising cost of living.

Government data showed this month that core inflation, which excludes the variable cost of fresh food but includes energy costs, has exceeded the BOJ's 2 percent inflation target for three straight months.

Asakawa told a news conference at Japan's National Press Club, "It's probably an exaggeration to say that it (the gradual rise in prices) is due to the weak yen."

Although the weaker yen has contributed to inflation in Japan, it only accounts for about 20-30% of the inflation rate, according to Asakawa.

Market participants view Asakawa, who has led the BOJ since 2020, as a potential successor to BOJ Governor Haruhiko Kuroda, whose second five-year term expires next April.

Before retiring from the Ministry of Finance, Asakawa served as Japan's top economic diplomat for four years starting in 2015.