Tokyo inflation accelerated across all major measures in June, pointing to gradually strengthening underlying price pressures ahead of next month’s Bank of Japan policy meeting. Core CPI, which excludes fresh food, rose from 1.3% yoy to 1.6% yoy, matching market expectations but remaining below the BoJ’s 2% target for a fifth consecutive month. Headline inflation also picked up from 1.4% yoy to 1.7% yoy, while the core-core measure, which strips out both fresh food and energy, accelerated from 1.6% yoy to 1.9% yoy.
The rise in the core-core measure suggests inflation is becoming increasingly broad-based rather than being driven solely by energy costs. Price pressures are spreading into non-energy categories, particularly food and services. Food inflation presented a mixed picture, with rice prices falling -6% as last year’s supply-driven surge continued to unwind. At the same time, prices for pork, tuna and potato chips all posted double-digit increases, indicating that cost pressures remain evident across many consumer staples.
Services inflation also continued to strengthen, rising 1.1% yoy and led in part by higher lodging costs. As services prices are generally viewed as a better gauge of domestic demand and wage-driven inflation, the latest figures are likely to be closely watched by BoJ policymakers. While core CPI remains below the central bank’s target, the continued pickup in underlying inflation supports the view that price pressures are gradually becoming more entrenched, reinforcing expectations that the BoJ will continue its policy normalization path.
| Indicator y/y | June | May | Expectation |
|---|---|---|---|
| Tokyo Headline CPI | 1.7% | 1.4% | — |
| Tokyo Core CPI (ex Fresh Food) | 1.6% | 1.3% | 1.6% |
| Tokyo Core-Core CPI (ex Fresh Food & Energy) | 1.9% | 1.6% | — |
