Japan's core inflation rate hits 3.7pc in May
Japan's core inflation rate hits 3.7pc in May
Stubbornly high food prices remain the main driver of inflation, the data showed. File photo: Reuters
Japan's core inflation hit 3.7 percent in May, the fastest annual pace in more than two years and keeping pressure on the central bank to resume interest rate hikes.
The data underscores the challenge the Bank of Japan faces in juggling mounting pressure from sticky food inflation and risks to the fragile economy from US tariffs.
The increase in the core consumer price index (CPI), which excludes volatile fresh food costs, compared with a median market forecast for a 3.6 percent gain and followed a 3.5 percent rise in April.
It was the fastest annual pace since 4.2 percent marked in January 2023, government data showed on Friday.
A separate index that strips away the effects of both volatile fresh food and fuel costs, which is closely watched by the BOJ as a better indicator of demand-driven price moves, rose 3.3 percent in May from a year earlier after a 3 percent rise in April.
It was the fastest year-on-year rise since January 2024, when the index was up 3.5 percent.
Stubbornly high prices of food, particularly those of Japan's staple rice, remained the main driver of inflation, the data showed.
Food prices, excluding those of volatile fresh food, rose 7.7 percent in May from a year earlier, faster than the 7 percent gain in April. The price of rice doubled in May from year-before levels, the data showed.
Service-sector inflation hit 1.4 percent in May, slightly faster than the 1.3 percent in April but much slower than the 5.3 percent increase for goods prices, the data showed.
The BOJ ended a massive stimulus programme last year and in January raised short-term rates to 0.5 percent on the view Japan was on the cusp of durably meeting its 2 percent inflation target. (Reuters)
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