Japan’s CPI core (ex-food) accelerated from 2.2% yoy to 2.5% yoy in May, slightly below the expected 2.6%. This marks the 26th consecutive month that core inflation has remained above BoJ’s 2% target. However, the increase was primarily driven by a significant 14.7% yoy rise in electricity prices.
In contrast, CPI core-core (ex-food and energy) slowed from 2.4% yoy to 2.1% yoy. Additionally, services inflation eased from 2.5% yoy to 2.2% yoy. Headline CPI also rose from 2.5% to 2.8% yoy, marking its ninth consecutive month of deceleration and the lowest reading since September 2022.
BoJ Governor Kazuo Ueda has repeatedly suggested that a July rate hike is a possibility. However, today’s report indicates that the inflation uptick is mainly due to cost-push factors, such as higher electricity prices, rather than increased demand. This might not provide a strong enough basis yet for BoJ to proceed with a rate hike at this time.
 accelerated from 2.2% yoy to 2.5% yoy in May, slightly below the expected 2.6%. This marks the 26th consecutive month that core inflation has remained above BoJ's 2% target. However, the increase was primarily driven by a significant 14.7% yoy rise in electricity prices.){kind=link}