Inflation and Unemployment: the twin scourge of Japan
Japan is facing the brunt of a spiraling inflation rate along with rising unemployment figures. Early estimates point to a mild recessionary trend in the economy. Consumer prices have increased sharply to a 10-year high. Compared to the stability of the last 5 months, Japan's unemployment rate has also recorded an upswing. Core prices recorded one percent hike in February as compared to the last year's figures. This was stated by the statistics bureau on 28th March in Tokyo. Contrary to expectations, the unemployment rate scaled to 3.9 percent. 'Core prices' precludes prices of fruit, vegetables and fish. Commodity and oil prices have attained record levels. Economists have estimated that Japan's unemployment rate will be 3.8 percent and consumption expenditure will increase by 2.4 percent. Job vacancy figures recorded a two year low. The ratio of jobs to applicant fell to 0.97.
Japanese industrial production is on a downslide. A surging yen along with increasing oil prices and the US slowdown are the major factors leading to this. Expectations of a rate cut from the central bank of Japan are high from all quarters.
Bank of Japan (BOJ), the central bank of the country has till date put in a flexible policy to tackle the twin problems of inflation and unemployment. The Japanese currency yen was trading at 99.69 for each dollar in Tokyo at 1:13 pm as on 28th March 2008.
Figures released on 28th March, 2008 predicts that wages which recorded a 3 year low in 2007 are unlikely to increase due to the augmented raw materials costs and high oil prices facing the companies. For an economy, which is already slated by analysts to reach a 5-year low growth rate in 2008, the twin curse of inflation and unemployment has become a challenge for the BOJ.
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