Japan's May Consumer Price Inflation Rate at 2.1%... Second Consecutive Month Above 2%

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Japan's consumer price inflation rate exceeded 2% for two consecutive months due to factors such as high oil prices.

According to the Nihon Keizai Shimbun on the 24th, the Ministry of Internal Affairs and Communications announced that Japan's CPI in May rose 2.1% year-on-year (excluding fresh food). This matches the largest increase in 7 years and 1 month since March 2015 (2.2%) and is the same as the increase in April.

The Bank of Japan (BOJ) has set a 2% inflation target. However, there are concerns that this price increase is not a result of a virtuous economic cycle but rather caused by rising international oil prices and yen depreciation, which only increases household burdens. The BOJ recently judged that the inflation rise is due to external factors such as energy price increases and lacks sustainability.

Looking at individual items, energy-related categories rose 17.1%. The increase in April was 19.1%, but the rise has somewhat slowed due to the expansion of gasoline subsidies. Food excluding fresh food recorded a 2.7% increase, and cooking oil rose by as much as 36.2%. Fresh food increased by 12.3%. Durable household goods also saw a larger increase in May at 7.4%, compared to 5.0% in the previous month.

The inflation issue is likely to persist for some time. Japan's inflation is relatively lower compared to other major advanced countries. In May, inflation rates were 9.1% in the UK, 8.6% in the US, and 5.2% in France, respectively.