June data shows underlying inflation accelerating faster than expected, increasing pressure on the Bank of Japan to hike rates in July.
Tokyo’s core-core consumer price index climbed to 1.9% year-on-year in June, exceeding the 1.8% forecast and marking a sharp rise from 1.6% in May. The measure, which excludes fresh food and energy, is closely watched by the Bank of Japan as a gauge of underlying inflation trends.
The acceleration, alongside wholesale inflation at a three-year high of 6.3%, suggests energy price pressures are spreading beyond fuel. While core CPI remains below the BOJ’s 2% target, the faster-than-expected rise narrows the central bank’s scope to pause its tightening cycle in July.
The yen may find marginal support as the data reinforces expectations of further rate hikes, following the BOJ’s recent move to a 31-year high.