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Japan inflation rises after tax hike

Consumer prices in Japan rose at their fastest pace in 23 years in April, rising 3.2% from a year earlier, following an increases in sales tax.

The government raised its sales tax rate from 5% to 8% on 1 April.

Japan has been battling deflation, or falling prices, for best part of the past two decades and policymakers have said that ending that cycle is key to reviving the country's economy.

The latest data is likely to provide a big boost to Japanese authorities who have introduced various measures to try and spur consumer price growth.

The hope is that once prices start to rise, it may force consumers and business to spend more money and not hold back on purchases, as they may have to pay more later on.

But as Rupert Wingfield-Hayes explains, the strategy is a high-risk one.

Watch more reports on Asia Business Report's website.

  • 30 May 2014
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