TOKYO: Japan’s consumer prices rose 3.3 percent year-on-year in June, with the pace of inflation accelerating from the 3.2 percent recorded in May, government data showed Friday. The latest data—which matched market expectations—comes ahead of the Bank of Japan’s (BoJ) monetary policy meeting next week. Most market watchers expect the central bank to keep its super-loose monetary easing policy in place.
Stripping out fresh food and energy, Japan’s prices rose 4.2 percent, data published by the internal affairs ministry showed. Friday’s core consumer price index figure matched the market’s expectations of 3.3 percent recorded in a Bloomberg survey.
“The current strong reading of CPI doesn’t mean the BoJ will make major policy changes,” Masamichi Adachi, economist at UBS Securities, told Bloomberg. “It’s pretty clear that inflation will slow from here as import-driven price gains taper off.” While electricity prices declined again in June, processed food prices rose, the ministry said. Inflation in Japan has been less extreme than price hikes seen in countries such as the United States, which have been fuelled by the war in Ukraine and supply-chain disruptions. The US Federal Reserve and many other central banks have raised interest rates to tackle high inflation.
But the Bank of Japan has stuck to its long-standing, ultra-loose monetary policy in an attempt to boost economic growth, causing the yen to fall against the dollar.
Only a minority of analysts expect the central bank to tweak its policy when it meets next week, Bloomberg said. The Bank of Japan’s two-percent inflation target, which it hopes will lead to sustainable growth in the world’s third-largest economy, has been surpassed every month for more than a year. But the central bank sees recent price rises as driven by temporary factors, and so has stuck to its easing policies such as a negative interest rate.
Earlier this year, the Bank of Japan announced a broad review of its “non-traditional” attempts to banish the deflation that plagued Japan since the 1990s. But moving away from monetary easing will be a tricky balancing act for the bank’s governor, Kazuo Ueda, who faces pressure to normalize policy while minimizing any shock to the economy. — AFP