[ad_1]
TOKYO: Core consumer prices in the Japanese capital rose 2.1% in June from a year earlier, data showed on Friday, accelerating from the previous month as rising fuel costs and a weaker yen that increased import costs weighed on households.
The data highlights the challenge the Bank of Japan faces in timing its next rate hike as cost pressures from a weak yen are keeping inflation above its 2% target but are also hurting consumption.
Tokyo’s core consumer price index (CPI), a leading indicator of national data, rose 1.9% in May, compared with the median market forecast for a 2.0% increase.
A separate index closely watched by the Bank of Japan that excludes the impact of fresh food and fuel costs and is a broader price trend indicator, rose 1.8% in June after rising 1.7% in May.
Japan’s economy shrank 1.8% in the first quarter from the previous period as businesses and households cut spending, casting doubt on the central bank’s view of a modest recovery.
While analysts expect economic growth to rebound this quarter, a weak yen is pushing up import costs for fuel and food, weighing on household confidence.
The Bank of Japan ended eight years of negative interest rates and other remnants of aggressive monetary stimulus in March as it judged that its 2% inflation target was within reach on a sustained basis.
Bank of Japan Governor Kazuo Ueda said the central bank would raise interest rates from their current near zero level if underlying inflation, which takes into account the consumer price index and broader price measures, accelerates to 2% as it currently forecasts.
The central bank expects wage increases to push up services sector inflation and keep inflation around 2% on a sustained basis, a prerequisite for the central bank to further gradually remove monetary stimulus.
[ad_2]
Source link
