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Japan minister says rising cost pass-through remains limited so far

He warned that pass-through of higher goods costs could intensify from summer into autumn, with the government and the Bank of Japan working to keep a stable path to Japan’s 2% inflation target.

Reported · Written up by our desk · Major Pairs

Japan Economy Minister Minoru Kiuchi said the overall impact of rising goods costs on consumer prices has not been passed through yet, speaking during the European trading session on Tuesday, according to FXStreet.

Kiuchi said both the Japanese government and the Bank of Japan are closely working toward achieving a sustainable 2% inflation target. He added that price rises remain moderate year on year in June’s overall CPI data, but that officials should stay alert to the possibility that cost pass-through on food could proceed from summer through autumn.

The minister said he expects consumer inflation to accelerate in the latter half of this year and then slow thereafter, based on government forecasts shared with the BoJ. He also said the BoJ should conduct monetary policy appropriately to reach the 2% goal and that close government-BoJ communication is important.

FXStreet reported there was no immediate reaction in the yen following Kiuchi’s remarks, with USD/JPY trading near its intraday high around 157.65 at press time. The yen’s value is influenced by Japan’s economic performance, BoJ policy, the yield differential versus the US, and broader risk sentiment, the outlet noted.

Latest closeUSD/JPY 157.38 ▼1.8%

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