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Core inflation in Tokyo stays below BOJ target for fifth month

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TOKYO, June 26 : Annual core inflation in Japan’s capital accelerated in June, data showed on Friday, a sign of broadening price pressures from the Middle East conflict.

The data will be among the factors the Bank of Japan will scrutinise at next month’s policy meeting, when the board will conduct a quarterly review of growth and price forecasts.

The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 1.6 per cent in June from a year earlier, data showed. It accelerated from a gain of 1.3 per cent in May and compared with a median market forecast for a rise of 1.6 per cent.

An index stripping away the effect of fresh food and fuel, which is closely watched by the BOJ as a better gauge of trend inflation, rose 1.9 per cent in June after a gain of 1.6 per cent in May.

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The Middle East conflict has complicated the BOJ’s decision on the timing and pace of rate hikes, as higher energy costs fuel inflation while simultaneously squeezing an economy heavily dependent on oil imports.

The BOJ raised interest rates to a 31-year high this month in a landmark step in its policy normalisation, signalling readiness to tighten further as it focuses on taming price pressures from the energy shock induced by the Iran war.

Source: Reuters

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