Rice threat to Japanese inflation

Japan's shoppers face paying about 20% more for rice in the coming months than they did a year ago, as world rice prices rise, analysts have warned.

Rising rice prices are expected to add 0.2 percentage points to the country's inflation, already at a 10-year high of 1.2%.

Years of deflation have left Japanese consumers unused to rising prices.

Separately, Vietnam is expected to lift its curb on rice exports after a better-than-expected harvest.

The Vietnamese government said that it had contracts to export nearly 70% of its 3.5 million-tonne sales target for 2008. The country's exports could help ease world rice prices which have almost trebled this year.

Fuel impact

Until recently, the cost of rice in Japan has remained steady, thanks to a restriction on imports and a government policy of storing rice as insurance against a poor harvest.

But the surging cost of food made from imported wheat - such as bread and noodles - has led to an increase in rice consumption.

Higher petrol prices also mean that people are eating rice at home rather than travelling to restaurants, analysts said.