On July 18, Japan's Ministry of Internal Affairs and Communications announced that the country's Consumer Price Index (excluding fresh food) for June rose by 3.3% compared to the same month last year.
This figure matches the market consensus median of 3.3% compiled by financial information provider QUICK. Compared to the 3.7% increase recorded in May, this represents a decrease of 0.4 percentage points. It is the first time in four months that the month-on-month growth rate has slowed. However, the inflation rate has remained above 3% for seven consecutive months.
The Nikkei reported that gasoline prices fell by 1.8% due to government subsidies, which appears to have contributed to the slowdown in inflation.
Food prices excluding fresh produce rose by 8.2%. This is the largest increase in one year and nine months, since the 8.8% rise in September 2023. Rice, a key driver of recent inflation in Japan, surged by 100.2%, and onigiri (rice balls made with rice) rose by 19.1%. Coffee beans increased by 40.2%, and chocolate by 39.2%.
Kyodo News explained, "With measures to address high prices emerging as the biggest issue in the Upper House election on July 20, a strong upward trend in prices has been confirmed," adding, "Inflation above 3% could influence the Bank of Japan's decision on further interest rate hikes."
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