Prices rise 3.7 percent in November amid growing expectations central bank will roll back huge stimulus.

Japan’s inflation has hit a four-decade high, raising pressure on the central bank to roll back its massive stimulus.

Prices rose at their fastest pace since 1981 in November, data showed on Friday, fuelled in part by higher energy costs.

Core inflation, which excludes volatile fresh food prices, climbed 3.7 percent last month compared with a year earlier, according to data released by Japan’s internal affairs ministry.

Prices jumped the most for processed food items and were also higher for electricity and durable goods like air conditioners.

While lower than the sky-high inflation hitting consumers in the United States, Britain and elsewhere, the price growth far exceeds the Bank of Japan’s long-term goal of 2 percent inflation.

Since the 1990s, Japan has swung between periods of sluggish inflation and deflation.

Unlike the US and other economies that have sharply hiked interest rates this year to tackle inflation, the world’s third-largest economy has gone against the grain and continues to keep interest rates at ultra-low levels to kick-start growth.

“The hurdle for policy normalisation isn’t low. The global economy may worsen in the first half of next year, making it hard for the BOJ to take steps that can be interpreted as monetary tightening,” Takeshi Minami, chief economist at Norinchukin Research Institute, told the Reuters news agency.

The BOJ stunned markets on Tuesday by tweaking its yield control and allowing long-term interest rates to rise more, a move market players see as a prelude to a further withdrawal of its massive stimulus programme.

BOJ Governor Haruhiko Kuroda, who will see his term end in April, has said the bank had no intention to roll back stimulus as inflation was set to slow below 2 percent next year.

But the October minutes showed how many of his fellow board members are shifting their attention to the risk of an inflation overshoot and prospects of a stimulus withdrawal.

“Given structural changes such as a shift away from globalisation, past experiences in Japan may not necessarily apply. We can’t rule out the chance of a big overshoot in inflation,” one member was quoted as saying in the October minutes.

Many analysts expect the BOJ to revise up its present forecast, made in October, for core consumer inflation to slow to 1.6 percent next fiscal year after hitting 2.9 percent in the current fiscal year ending in March 2023.

Japan’s economy unexpectedly shrank an annualised 0.8 percent in the third quarter as global recession risks and higher import costs weighed on consumption and businesses.