According to the Japanese government, consumer prices saw their biggest rise in almost a decade because of higher energy costs, while industrial production lost ground. The Ministry of Internal Affairs and Communications also reported that the core consumer price index rose 0.4% in November, which was the biggest increase since a 1.8% increase in March 1998. The main culprits for the massive increase were energy prices, which jumped 5.4%, and gasoline prices, which climbed 10.8% over the year.
Despite the fact that the nation's jobless rate saw an unexpected decline of 3.8% in November, the Bank of Japan decided to keep interest rates unchanged. A rise in consumer prices was perceived by the Bank as a sign that the country was able to surpass the deflation that Japan had to fight with over the past few years.
The mortgage crisis in the U.S. and worries about the possible impact of the global economic slowdown on Japan's economy may have also been factors in the Bank of Japan's decision to keep its key interest rate unchanged at 0.5%. It is the lowest interest rates level among major industrialized countries.
On the other hand, Japan saw a an unexpected decline in its jobless rate to 3.8% in November from 4.0% in October. The total number of jobless was down 130,000 on year for the 24th consecutive month, as the Ministry of Internal Affairs and Communications declared.
However, Japan's economic expansion continues and I believe it has all the economic power to surpass any further market crossroads.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
