Markets

Japanese Inflation Rate Stays Above Central Bank Target in June

Japanese household budgets, especially among low-income earners, faced pressure from higher food prices that was likely to cool appetite for a post-pandemic spending splurge. File photo: Reuters.

Japanese inflation in June remained above an official target for a third straight month, challenging the central bank’s view that rising prices are a passing phenomenon.

Households worry about higher living costs as the economy faced pressure from rising global raw material prices.

The nationwide core consumer price index (CPI), which excludes volatile fresh food costs but includes those of energy, rose 2.2% in June from a year earlier, government data showed, above the 2% target set by the Bank of Japan (BOJ).

The Japanese inflation data, which matched a median market forecast, followed rises of 2.1% in May and April.

Household budgets, especially among low-income earners, faced pressure from higher food prices that was likely to cool appetite for a post-pandemic spending splurge, said Takeshi Minami, chief economist at Norinchukin Research Institute.

“The rebound will be quite sluggish,” Minami added. “The momentum should have been strong if nothing had happened, but the impact of price rises and a seventh Covid-19 wave is suppressing it considerably.”

The core-core CPI, which strips away both volatile food and fuel costs, was up 1.0% in June from a year earlier, marking the sharpest rise since February 2016.

Rising fuel and food prices, blamed partly on Russia’s invasion of Ukraine and a sharply weakening yen that is swelling import costs, are expected to keep Japanese inflation above the BOJ’s target for most of this year, analysts say.

Reuters, with additional editing by George Russell

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.