TOKYO :Core consumer inflation in Japan’s capital slowed in June but stayed well above the central bank’s 2 per cent target, data showed on Friday, keeping alive market expectations for further interest rate hikes.
The Tokyo consumer price index (CPI), which excludes volatile fresh food costs, rose 3.1 per cent in June from a year earlier, government data showed, compared with a median market forecast for a 3.3 per cent gain. It slowed from a 3.6 per cent increase in May.
A separate index for Tokyo that strips away both fresh food and fuel costs – closely watched by the Bank of Japan as a measure of domestic demand-driven prices – rose 3.1 per cent in June from a year earlier after a 3.3 per cent gain in May, the data showed.
The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5 per cent in January on the view Japan was on the cusp of sustainably hitting its 2 per cent inflation target.
Governor Kazuo Ueda has said the BOJ will keep pushing up borrowing costs if continued wage gains underpin consumption and allow firms to raise prices, thereby maintaining inflation stably around its 2 per cent target.
The rising cost of living has drawn the attention of some BOJ board members including Naoki Tamura, who said on Wednesday the BOJ may need to raise interest rates “decisively” if upward inflation risks heighten.
