ING maintains June rate hike call as pipeline inflation pressures offset softer April CPI data in Japan.
Japan’s April consumer prices rose 1.4% year-on-year, below the 1.6% consensus and ING’s 1.8% forecast, marking a slowdown from March’s 1.5%. Core inflation, excluding fresh food, also fell short of expectations and the prior month’s print.
Energy subsidies drove a 3.9% decline in energy prices, with petrol down 9.7% and utility fees dropping 1.5%. Education costs fell 6.1% due to tuition fee reductions, while rice prices continued easing from last year’s peak. Goods prices rose 0.5% month-on-month, while services prices declined 0.5%.
ING expects the Bank of Japan to hike rates in June, citing pipeline inflation and core prices projected to stay above 2%. BOJ board members Koeda and Masu, previously opposed to hikes, have signaled openness to tightening, supported by strong Q1 GDP and April export data.