Japan inflation rises slightly to 2.6 percent in June: Data
TOKYO
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Japanese inflation was slightly higher in June, with prices rising 2.6 percent on-year compared with 2.5 percent in May, Internal Affairs Ministry data showed on July 19.
But the core Consumer Price Index (CPI) reading, which excludes volatile fresh food prices, was still softer than market expectations of a 2.7 percent increase.
"Energy prices rose," boosting the overall figure, even though "the pace of increase in electricity and gasoline bills slowed," the ministry said.
The data comes as the Bank of Japan takes gradual steps away from the ultra-loose monetary policies that have sustained the world's fourth-largest economy for over a decade.
Analysts are speculating on when the bank will make its next rate hike after it increased interest rates in March for the first time since 2007.
The BoJ's next policy decision is due on July 31.
UBS economists Masamichi Adachi and Go Kurihara said BoJ policymakers would raise rates "once they have greater conviction in their economic and inflation outlook."
But "without a recovery in consumption in summer, the conviction will likely not return", so "the next three months are critical."
Last month, the central bank said it would scale down its huge purchases of government bonds, the latest attempt to move away from a quantitative easing programme designed to banish stagnation and harmful deflation.
The BoJ wants to see demand-driven inflation of two percent, fuelled by wage increases.
Japanese inflation has been above the target since April 2022, but analysts question to what extent this is caused by temporary factors such as the war in Ukraine.
The yen has also tumbled against the dollar this year, driving up the price of imported goods in Japan.