Oil prices hit Japanese inflation

Japanese shoppers have been cutting back on spending as prices rise

Rising oil and commodity prices sent Japanese inflation rising to the highest for a decade in May.

Core inflation, which excludes volatile fresh food prices, rose 1.5% from the same month in 2007.

Household spending fell 3.2% in the month, according to the Ministry of Internal Affairs and Communications.

Japan struggled with deflation until last year, but Friday's figures showed consumers reining in their spending as the prices of basic items rose.

Non-fresh food prices soared, with spaghetti up 32.2%, instant noodles up 20.7% and white bread rising 12%.

Japanese drivers were hit particularly hard as the government reinstated a fuel tax that had been suspended in April.

"The impact of higher raw material prices on corporate earnings and consumer sentiment still warrants close attention," said Japanese Economics Minister Hiroko Ota.

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