Japan inflation hits 40-year high in test of central bank's resolve

TOKYO - Japan's inflation hit its fastest clip in 40 years in October as a weak yen pushed up the cost of imported commodities, stretching the credibility of the central bank's view that continued stimulus is needed for stable price growth.

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Consumer prices, excluding fresh food, climbed 3.6 per cent from a year earlier, with the acceleration driven by processed food and the fading impact of mobile phone fee cuts, the Internal Affairs Ministry reported on Friday.

This is the fastest price growth since 1982. Core inflation has exceeded the Bank of Japan's (BOJ) 2 per cent price target for seven straight months, with the yen's historic fall amplifying the trend.

BOJ governor Haruhiko Kuroda reiterated his view that ultra-low interest rates remain appropriate, though he acknowledged that the latest gains were significant and inflation could accelerate further.

While economists largely agree with the BOJ that inflation will cool in 2023, partly as a result of government subsidies, some analysts see the bank underestimating the underlying strength of prices.