Japanese inflation up, may accelerate further

Global interest rates are falling. The same cannot yet be said of global inflation.

Bloomberg reports a jump in Japan's inflation rate.

Japan's inflation rate doubled in December to the fastest in more than nine years, as companies passed rising oil and commodity costs to consumers.

Core consumer prices, which exclude fresh food, climbed 0.8 percent from a year earlier, the statistics bureau said today in Tokyo. The median estimate of 44 economists surveyed by Bloomberg News was for a 0.6 percent gain...

Core consumer price gains may accelerate and could even exceed 1 percent, Kazuo Momma, head of the Bank of Japan's research and statistics bureau, said today.

Tokyo's core prices, a harbinger of the nationwide index, rose 0.4 percent in January from a year earlier, following a 0.3 percent gain in December. Excluding energy as well as food, nationwide consumer prices fell 0.1 percent in December. By that measure, they've failed to rise for nine years.

Expectations of a cut in interest rates by the BoJ have been pared back.

Investors reduced bets that the central bank will lower the key lending rate from 0.5 percent later this year. There's a 43 percent chance of a cut by July, down from 67 percent before the inflation report, according to calculations by JPMorgan Chase & Co. using overnight interest-rate swaps.

But in India, expectations of a rate cut were raised this week despite inflation edging up. From AFP/CNA:

Inflation accelerated to 3.83 percent for the week ended January 12 from 3.79 percent a week earlier, according to the wholesale price index, India's main cost-of-living monitor. It was 6.15 percent in the same year-ago period.

But inflation remained well below the Reserve Bank of India's ceiling of close to five percent for this fiscal year to March 31, 2008...

[F]ears about a global slowdown that could hit Indian growth and the US Federal Reserve's massive 0.75 percentage point cut Tuesday in its key lending rate to 3.50 percent sparked hopes the bank would ease monetary policy soon.