Japan’s Inflation Rises for First Time in 3 Months as Energy Costs Weigh
Author: CNBC-TV18 Markets·
Key Takeaways
- •Japan’s main inflation indicator rose 1.6% in June after falling for three straight months.
- •Higher energy costs remain an important factor in Japan’s inflation backdrop.
- •The inflation reading is relevant to the Bank of Japan as it evaluates further reductions in policy accommodation.
- •A weaker yen can increase the cost of imported energy and other goods for households and businesses.
- •The Bank of Japan is still expected to raise interest rates this year.
Japan’s main inflation indicator rose for the first time in three months, increasing 1.6% in June, a reminder that Japan’s price backdrop is still being shaped by higher energy costs even as other pressures remain more muted.
The reading matters because the Bank of Japan has been gradually moving away from its long period of ultra-loose policy, and inflation data is one of the key inputs for judging whether that shift can continue. The latest increase also comes against a weaker yen, which can make imported energy and other goods more expensive for households and businesses.
The Bank of Japan is still expected to raise interest rates this year despite the yen’s decline.