Japan’s core consumer inflation accelerated to 1.6% in June from a year earlier but remained below the Bank of Japan’s 2% target for a fifth consecutive month, as government fuel subsidies helped offset rising raw material costs linked to the Middle East conflict.
Data released on Friday showed the core consumer price index (CPI), which excludes volatile fresh food prices, rose from 1.4% in May and matched market expectations.
A separate index that excludes both fresh food and fuel, closely monitored by the Bank of Japan (BOJ) as a better measure of underlying inflation, increased 1.7% year-on-year in June after rising 1.8% in the previous month.
The inflation figures come ahead of the BOJ’s monetary policy meeting next week, where policymakers are widely expected to keep interest rates unchanged while updating their quarterly economic and inflation forecasts.
The central bank raised interest rates to a 31-year high in June as part of its policy normalisation efforts, signalling that further tightening remains possible as it seeks to contain inflationary pressures stemming from higher energy prices.
The latest data suggests government fuel subsidies have continued to cushion the impact of rising oil prices, even as geopolitical tensions in the Middle East have pushed up raw material costs.
Reuters
