Inflation accelerates in Japan, raising expectations of interest rate hikes
Date
6/23/2024 7:39:49 AM
(MENAFN) Japan's inflation rate surged following an uptick in tariffs associated with renewable energy, heightening anticipations that the central bank will implement interest rate hikes in the near future. As per a report from the Home Affairs Ministry released on Friday, consumer prices, excluding fresh food items, experienced a 2.5 percent increase in May compared to the previous year, up from 2.2 percent in April. Although this figure slightly missed economists' expectations, it marked the twenty-sixth consecutive month in which inflation exceeded the Bank of Japan's target of 2 percent.
The recent uptick in Japan's main price index, following two months of slowdown, reinforces the likelihood of the Bank of Japan raising interest rates as early as the upcoming month. The central bank indicated it would unveil detailed plans to reduce bond purchases at that time. Bank of Japan Governor Kazuo Ueda, when questioned last week about the possibility of rate hikes at the next meeting, expressed firm affirmation, stating it was "absolutely" possible as long as economic data supported such action.
Ueda further hinted at the possibility of an imminent rate hike during parliamentary discussions earlier in the week, emphasizing the likelihood of such a move next month contingent upon economic and financial conditions.
However, while overall inflation has surged, core inflation, excluding fresh food and energy prices, continued its decline, dropping by 2.1 percent in May, marking the ninth consecutive month of decrease. Furthermore, services price growth, a key factor in the Bank of Japan's monetary policy considerations, also experienced a slowdown, decreasing to 1.6 percent after a notable deceleration to 1.7 percent in April. This slowdown underscores a growing reluctance among companies to further raise prices, as heightened costs weigh on consumer spending habits.
MENAFN23062024000045015682ID1108362190
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.