Japan core inflation rate in June creeps up from 4-year low as higher oil prices bite
A customer visits a store on Togoshi Ginza shopping street in Tokyo on January 23, 2025.
Philip Fong | Afp | Getty Images
Japan’s core inflation It stood at 1.6% in June as high oil prices began to spread throughout the economy.
This was the first rise in core inflation since March and was in line with the 1.6% growth expected by economists polled by Reuters. Core inflation in Japan excludes fresh food prices.
While headline inflation rose to 1.7% from 1.5% in May, the “core” inflation rate, which excludes fresh food and energy prices, also fell to 1.7%, its lowest level since August 2022. Supported by government subsidies, energy prices fell just 0.1% year-on-year in June, compared to a 2.5% drop in May.
While Japan has introduced subsidies to cushion the impact of the global rise in energy prices on consumers, businesses have seen a sharp increase in costs due to price increases. June producer price index It reached the highest level since March 2023 at 7.1%.
While Japan is struggling with high energy prices due to the Middle East crisis affecting energy supply, there is also a historical weakness in energy prices. yen increased import costs.
Trade data released on Wednesday showed the country’s oil imports in value terms rose more than 59% year-on-year as costs remained high.
Japan meets 87 percent of its energy needs through imports International Energy Agency.
The weak yen has raised concerns that Japan will have to cope with high imported inflation. The currency fell to 163.23 on Tuesday, its lowest level in recent years. The yen is currently hovering around 163.
Reuters on Wednesday quoted sources familiar with the Bank of Japan’s thinking as saying: reported this The central bank “remains alert to upward inflation risks that could lead to faster rate hikes than markets anticipate.”
Some at the BOJ see the possibility of raising interest rates more quickly if price pressures from a weak yen and rising fuel costs from the conflict in Iran drive inflation up faster than expected, the report said.
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