Japan's tackling a problem and hasn't had to deal with in decades. Inflation. Hello, this is the Marketplace Morning Report and we're live from the BBC World Service. I'm Leanna Byrne. Good morning. So Japan's inflation rate is heating up, hitting its fastest pace in more than two years, 3.5% in April. and that could mean higher interest rates for the first time in

years. It's a big shift for a country that's used to falling prices and a major challenge

for the government and central bank. Kyoko Nagana runs a company called Saki Lovers Inc. She promotes

and exports Japan's iconic rice wine, but lately rising prices have made running her business a lot trickier.

It's ridiculously high right now.

And rice is, you know, are staple food and it's really affecting people's lives.

And soaring rice prices have become something of a flashpoint.

Japan's farm minister had to resign after he admitted

he's never had to buy rice because he gets out his gifts from supporters. So what's behind this spike in

inflation? Sejaro Takeshita is professor of management at the University of Shizuoka in Japan.

Sejoro, good morning. Good morning. So inflation in Japan, it's at 3.5 inflation rate. Some people

might say that's not huge, but for a country that's battled low inflation for decades, it is important,

isn't it? Absolutely. This is something that most of us have not experienced, at least for more

than two decades. So, yes, it's quite big. And what's driving this

surge? Very much due to food, basically half this rise can be explained by the food itself. One of the

reason why Japanese inflation became fairly high is that Japanese have been very slow on passing

on prices, especially in food stuff,

it's risen by 8 to 9 percent, which is much higher than US or Eurozone. In fact, this rise of

rice price in Japan is probably the biggest item that we talk about constantly. So this is becoming

very serious. The rice price is basically doubled in less than a year.

Now, how is the Bank of Japan likely to respond? Because it's known for maybe not responding a lot of

the time. Absolutely. I agree with you. You know, Bank of Japan really do not have the deep

...