Japan inflation slows to 3.2 percent in May
Source: AFP
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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.
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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.
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
