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2026-05-29 08:58:24
[Tokyo's core inflation falls to a four-year low, putting the Bank of Japan in a dilemma] (1) Data from Japan's Ministry of Internal Affairs and Communications in May showed that Tokyo's core CPI, excluding fresh food, rose 1.3% year-on-year, falling for the sixth consecutive month to a near four-year low and below market expectations. This situation has put the Bank of Japan's policymakers in a dilemma, as they have difficulty finding sufficient justification for raising interest rates as early as next month. (2) The "core core CPI" (a more objective indicator of potential inflation), excluding fresh food and energy, rose 1.6% year-on-year; the overall CPI rose 1.4% year-on-year. Tokyo's price data is considered a leading indicator of inflation trends across Japan. (3) The decline in inflation was mainly due to the narrowing of the price increase of processed food, a significant reduction in water rates, and the continued decline in energy prices caused by the gasoline subsidy introduced by Prime Minister Sanae Takaichi. Takaichi plans to submit a supplementary budget to the Diet soon to continue the subsidy measure.
