Summary: Japanese consumer prices are accelerating

What the chart shows: The chart shows the 12-month per cent change in the headline Japanese consumer price index

Why is the chart important: The Japanese government and the Bank of Japan are currently engaged in a major effort to break Japan’s two-decade long deflationary spiral. They aim to do this through three ‘arrows’ – a fiscal stimulus, a major monetary stimulus and – as yet not clearly spelled out – structural reform. A key goal is to reach 2% inflation by 2015. In the year to July, consumer prices rose by 0.7%. But, more importantly, in July itself, the CPI rose by a seasonally adjusted 0.4%, the highest rate in five years. Even if consumer prices were to remain unchanged from now on (which is highly unlikely), this would still take the twelve-month rate to 1% by early 2014. Prime Minister Abe’s government may not achieve all its targets. But it should successfully get inflation to 2% in 2015, if not before.