Japanese inflation stays above BoJ target for third straight month

A customer places Japanese 1,000 yen banknotes on a cash register while shopping at an Akidai YK supermarket in Tokyo, Japan on Monday, June 27, 2022. Core consumer inflation in Japan remained higher the central bank’s 2% target for a third consecutive month in June, as the economy faced pressure from high global commodity prices that pushed up the cost of the country’s imports.

Kiyoshi Ota | Bloomberg | Getty Images

Core consumer inflation in Japan remained above the central bank’s 2% target for a third consecutive month in June as the economy faced pressure from high global commodity prices that raises the cost of the country’s imports.

Rising consumer prices challenge the Bank of Japan’s view that recent price rises in the world’s third-largest economy will remain somewhat temporary, even as households worry about rising costs of living .

The national core consumer price index (CPI), which excludes volatile fresh food costs but includes energy costs, rose 2.2% in June from a year earlier, according to government data.

The data, which is a median market forecast, means inflation has remained above the BOJ’s 2% target for a third consecutive month. It follows increases of 2.1% in May and April.

Household budgets, especially among low-income people, have come under pressure from rising food prices that were likely to dampen appetite for a post-pandemic spending spree, said economist Takeshi Minami. chief at the Norinchukin Research Institute.

“The rebound will be quite slow,” added Minami. “Momentum should have been strong if nothing had happened, but the impact of rising prices and a seventh wave of Covid-19 is significantly stifling it.”

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The core CPI, which strips out both volatile food and fuel costs, rose 1.0% in June from a year earlier, marking the biggest gain since February 2016.

Rising fuel and food prices, blamed in part on Russia’s invasion of Ukraine and a sharply weakened yen that is inflating import costs, are expected to keep core consumer inflation going. in Japan above the BOJ target for most of this year, analysts said.

But that still leaves the overall pace of price increases in Japan well below the much steeper increases in the United States and European economies, as slow wage growth and a slow recovery in consumption discourage Japanese businesses. to raise prices.

Inflation in the 19 countries sharing the euro has reached historic highs above 8%. UK inflation last month was at its highest in 40 years.

The BOJ on Thursday raised its consumer core inflation forecast for the current fiscal year ending March 2023 to 2.3% from 1.9%, but kept its ultra-low interest rates in place. even as many of its global peers are tightening policy sharply in an attempt to cool price pressures.

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