In Tokyo, core inflation slows but remains above BOJ target

From Yahoo Finance: 2025-06-26 19:42:00

Consumer inflation in Tokyo slowed to 3.1% in June due to utility bill cuts, but remains above the Bank of Japan’s 2% target. Prices of services and food, including rice, rose steadily, adding pressure to the export-reliant economy facing U.S. tariffs. The BOJ will review data at the end of July for potential rate hikes.

Tokyo’s CPI, excluding food costs, rose 3.1% in June, below the forecasted 3.3%. The slowdown was attributed to fuel subsidies and water charge cuts. Another index, excluding food and fuel costs, also rose 3.1%. Analysts predict a rate hike in October due to strong inflation.

Food prices in Tokyo rose 7.2% in June, with significant increases in rice, chocolate, and coffee. Service-sector inflation was at 2.1%, slightly lower than the previous month. The BOJ raised rates to 0.5% in January, aiming to meet the 2% inflation target sustainably.

Despite exceeding the 2% target for over three years, the BOJ faces challenges due to higher U.S. tariffs impacting economic growth forecasts. Rising raw material costs continue to drive inflation. The central bank’s decision on further rate hikes is complicated by these factors.



Read more at Yahoo Finance: Core inflation in Japan’s capital slows but stays above BOJ target