TOKYO -- Japan's inflation is accelerating, and the sales tax hike appears to be the trigger.

Companies are raising sticker prices above the actual sales tax increase. A week ago, the tax was raised from 5% to 8%. Many consumers feel they are being prodded to pay more than an extra 3 percentage points on their goods.

The Doutor Coffee Shop chain now charges 220 yen ($2.11) for a cup of regular coffee, compared to 200 yen before April. Doutor Nichires Holdings, which operates the cafe chain, has maintained prices for six years. "Our price changes were due to increases in ingredient costs and that happened to take place along with the consumption tax hike," said a company official.

Stationery supplier Plus has increased before-tax prices of 1,054 items by 12% on average.

Other factors

The Bank of Japan estimates the three percentage point increase in the consumption tax will push up prices by 1.7% in April.

Two factors are behind the relatively small rise. First, the tax increase is not inclusive. School tuition and insurance-covered medical expenses are among the areas of spending that remain tax-exempt. The other factor is that utilities bills for April will not be entirely charged using the new tax rate, because part of the costs were incurred by consumers from March.

Real prices, which subtract the 1.7% impact of the consumption tax from the actual amounts stores charge, are projected to grow at a faster than expected pace. Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, projects the genuine change apart from the consumption tax hike may come to 1.6% in April. "I won't be surprised if it hits 1.7%," he said.

The consumption tax increase served as an opportune time for many businesses looking to pass down other costs to consumers. Price tags needed to change April 1 anyway. "(Companies) have long endured rising costs and decided to raise prices along with the tax hike," said Shinke.

Rising personnel costs are also responsible for price increases. Many companies are planning to increase hourly wages for part-time workers to remain competitive amid intensifying competition for hires. Regular employees' wages are also rising at some companies.

The government has been encouraging businesses to pass along the consumption tax increase to prices. That measure "is playing a big part," said Taro Saito, head of the economic research group at NLI Research Institute.

"We don't have problems with selling and buying products at higher prices," said Yasuyuki Inoue, chairman of Aichi Sangyo, a machine-tool manufacturer in Tokyo's Shinagawa Ward.

The BOJ last year pledged to achieve an inflation target of 2% within two years.

(Nikkei)