The operator of cheap chic clothing brand Uniqlo, whose affordable garments have come to symbolise deflation plagued Japan, says it will hike its prices, blaming a weaker yen.

Reports on Tuesday said everything from T-shirts to trousers would cost up to five per cent more by the end of the year, helping nudge the country’s inflation rate up, in line with Prime Minister Shinzo Abe’s ambitions.

Unfortunately for the premier, the hike is being driven by rising costs and a falling yen, and is not the result of rocketing demand, making it the wrong kind of inflation.

“We will gradually raise prices for our products from July,” said Keiji Furukawa, head of Uniqlo operator fast retailing’s IR section.

In April Uniqlo opened its first Australian store, in Melbourne.

Abe swept to power in late 2012 promising to reanimate the lifeless economy with an unprecedented program of fiscal spending and massive monetary easing from the Bank of Japan.

Ideally, he would like to generate what he has called a “virtuous circle” where rising demand pushes up prices, which in turn generates higher wages, giving consumers more spending power and further strengthening demand.

The latest data suggest the premier’s bid to stoke the world’s number three economy by reversing years of falling prices is so far moving in the right direction.

Figures last month showed consumer prices in April rose 3.2 per cent from a year ago, picking up pace from a 1.3 per cent rise in March, and the fastest pace in 23 years.

Much of that rise was because of a three percentage point hike in sales tax, which came into effect on April 1. With the effect of the tax raise stripped out, real inflation was estimated at around 1.5 per cent.

Analysts say the economy as a whole will see a temporary backlash from the tax rise, but is likely to pick up later this year.

Uniqlo’s price hike will be about five per cent across its new autumn and winter ranges.

Furukawa did not confirm or deny the figure, but said “the increase in prices varies among items.”

AFP