Japan inflation slows to 3.2 percent in May

Japan inflation slows to 3.2 percent in May

Inflation in Japan beat market expectations in May
Inflation in Japan beat market expectations in May. Photo: Yuichi YAMAZAKI / AFP
Source: AFP

Japan's consumer prices rose 3.2 percent year on year in May, with the pace of inflation slowing from the 3.4 percent recorded in April, government data showed Friday.

The figure, which excludes volatile fresh food prices, was higher than market expectations, and topped March and February's readings of 3.1 percent.

Inflation in Japan has been less extreme than the price hikes seen in other countries such as the United States, fuelled by the war in Ukraine among other factors.

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.

Friday's core consumer price index (CPI) figure was slightly higher than market expectations of 3.1 percent recorded in a survey of Bloomberg Economists.

Read also

Bank of England to hike again over stubborn inflation

PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!

Mizuho Research & Technologies said before the data release that core CPI would likely remain above three percent until the summer, before slowing "from around the latter half of this fiscal year".

Higher prices for processed food, durable goods, mobile phone handsets and hotel fees, among other items, contributed to inflation in May, the internal affairs ministry said.

Declines in electricity and gas prices contributed to the slowing pace of inflation.

Excluding energy, the data released by the ministry showed prices rose 4.3 percent in May, up from 4.1 percent in April.

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.

Read also

High inflation hinders UK cost-of-living fight

Earlier this year, the BoJ 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 new governor Kazuo Ueda, who faces pressure to normalise policy while minimising any shock to the economy.

On Thursday, the Bank of England increased interest rates by an unexpected half-point to a 15-year peak of five percent.

The European Central Bank also recently hiked interest rates to a 22-year high. The US Fed has paused its aggressive tightening campaign, while indicating a sharp increase in rates could be needed before the end of the year.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.