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Japan core CPI rises to 1.6% while underlying inflation stays contained

Headline inflation accelerated to 1.7% year over year, but the core-core measure eased to 1.7%, leaving the Bank of Japan expected to hold its policy rate at next week’s meeting.

Reported · Written up by our desk · Central Banks

Japan’s core consumer inflation accelerated in June, with the CPI excluding fresh food rising to 1.6% year over year, matching expectations. Headline inflation also picked up to 1.7% from 1.5% in May, according to Action Forex.

Despite the rebound in headline prices, underlying inflation appeared more contained. The core-core CPI, which excludes both fresh food and energy, eased to 1.7% from 1.8% the prior month, with food remaining the main contributor to inflation.

Food price growth excluding fresh food rose to 3.1% year over year, driven by higher raw material costs that lifted processed items such as bento meals and chocolates. Meanwhile, energy costs fell 0.1% year over year after dropping 2.5% in May, helped by ongoing government subsidies that cushion households from higher fuel costs.

Action Forex said the June release is unlikely to change expectations that the Bank of Japan will keep its policy rate unchanged at next week’s meeting after lifting it to 1.00% in June. Instead, market attention is expected to focus on the BoJ’s updated economic and inflation projections, particularly risks from rising oil prices and a weak yen, with Brent crude cited at $100.

Latest closeWTI crude $92.23 ▲6.2%|Brent $100.54 ▲6.9%

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