May Japan Prices Rise 2.5%
Japan Central Bank May Raise Rates After Confirming Q2 Economic Growth Rate
As consumer prices rise in Japan, there are forecasts that affordable travel may come to an end.
According to the Bank of Japan and Bloomberg on the 22nd, Japan's consumer prices excluding fresh food rose 2.5% year-on-year in May. This figure increased from 2.2% in April and, although slightly lower than expected, exceeded the Bank of Japan's 2% target for the 26th consecutive month. The main cause of the price increase is known to be a 14.7% surge in electricity charges.
Taro Kimura, a Bloomberg economist, said, "This price increase was mainly driven by cost-push factors rather than demand growth, and there was little evidence that wage increases boosted service prices." However, he added, "The fact that the core indicator exceeded the 2% inflation target aligns with the central bank's inflation outlook."
However, if inflation continues, it could prompt interest rate hikes. The Bank of Japan is expected to announce specific plans for a rate increase next month. There is growing likelihood that the decision will be made after confirming the Q2 economic growth rate to be announced in August this year.
Nobuyasu Atago, chief economist at Rakuten Securities Economic Research Institute, said, "The rebound in the consumer price index was within the expected range," adding, "This report alone will not have a decisive impact on the Bank of Japan's next rate hike."
Currently, the Japanese yen is under pressure due to the large interest rate gap with other countries. The won value per 100 yen exceeded 1,150 won in 2021 but is currently around 871 won this year. As a result, many Koreans took advantage of the 'Enjeo Special' and traveled to Japan. As of April 2024, about 661,200 Koreans visited Japan, which is approximately a 56.1% increase compared to 2019.
Some studies have shown that for every 1 won increase in the won value per 100 yen, the number of Koreans visiting Japan increases by 350,000.
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