Hooray for inflation! Rapid rises in the price of food and oil, combined with a slowdown induced by the credit squeeze, are bad news for most of the world. But for Japan – mired in deflation for the best part of a decade – they are also an opportunity to establish expectations of a sustained rise in prices.

Much higher prices for spaghetti, gasoline and other foods and fuels caused Japan’s headline inflation rate to hit the dramatic high of 1.2 per cent in the year to March 2008. That is low compared with the 1-3 per cent range most developed country central banks are comfort­able with, but the highest inflation Japan has had for 10 years.