Apr. 21, 2022 03:06 pm JST
Posted in: Japan logs ¥412.4 bil trade deficit in March on weak yen, soaring oil prices See in context
bokuda
Japan doesn't compare to modern countries because Japan doesn't add energy and food cost to the inflation rates.
No. You are confused. You are mixing up CPI and Core CPI. When you compare inflation rates of different countries, you do not mix up these two.
Here is the source of the comparisons. It compares CPI (not Core CPI).
https://worldpopulationreview.com/country-rankings/inflation-rate-by-country
Now, there is an important reason for using Core CPI sometimes. (Hence your confusion.)
Here is one reason for using Core CPI:
(1) CPI is the consumer price index. A measure of the cost of living for the typical person.
(2) Core CPI is the CPI – energy and food prices.
Energy and food prices are removed because they have tendency to be highly volatile.
This clearly has policy implications. If we look only at CPI, monetary authorities may be inclined to change interest rates more frequently. For example, in 2008, we had a rise in energy prices causing cost push inflation of 5%, a few months later we were in deep recession. In other words, CPI can give a misleading impression of underlying inflationary pressures. If you tighten monetary policy because of temporary food and energy inflation, you create the potential for slowing down economy. Similarly when there is a slump in energy and food prices, there is a danger monetary policy can become too lax, creating future underlying inflation.
https://www.economicshelp.org/blog/2587/inflation/difference-between-cpi-and-core-cpi/#:~:text=CPI%20is%20the%20consumer%20price,CPI%20%E2%80%93%20energy%20and%20food%20prices.
So, don't confuse CPI and Core CPI and use one or the other appropriately.
