May’s Tokyo core CPI rose 1.3% year-on-year, missing forecasts and extending a six-month deceleration ahead of the BOJ’s June meeting.
Tokyo’s core consumer price index rose 1.3% year-on-year in May, below the 1.5% forecast and marking a sixth consecutive month of slowing inflation. The decline was driven by government subsidies on fuel and education, offsetting rising import costs tied to a weak yen.
The core-core index, excluding fresh food and energy, increased 1.6%, also missing expectations of 1.9%. Headline CPI came in at 1.4%, down from April’s 1.5%. Analysts warn inflation may reaccelerate as energy and import price pressures persist, complicating the Bank of Japan’s policy outlook.
Markets had priced in a potential rate hike to 1% at the BOJ’s June meeting, but the softer data may delay action. The central bank has signaled a near-term hike, though inflation remains below its 2% target.