For the Second Consecutive Month, Japan's Consumer Inflation in May Exceeded the BOJ Target.

According to data released on Friday, Japan's annual core consumer inflation exceeded the central bank's target for a second consecutive month in May, underscoring the growing pressure that rising global raw material prices are exerting on the nation

June 24, 2022 - 11:45 AM 354 views

For the Second Consecutive Month, Japan's Consumer Inflation in May Exceeded the BOJ Target.

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© For the Second Consecutive Month, Japan's Consumer Inflation in May Exceeded the BOJ Target.

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According to data released on Friday, Japan's annual core consumer inflation exceeded the central bank's target for a second consecutive month in May, underscoring the growing pressure that rising global raw material prices are exerting on the nation's already vulnerable economy.

·   Headline CPI 2.5% YoY, projected to be 2.9%, was 2.5% before. (After an increase of 2.1 percent in April, this retains the Bank of Japan's 2 percent target for a second consecutive month.)

·    CPI excluding fresh food increased by 2.1 percent YoY, as expected, and by 2.1 percent earlier.

·    CPI excluding food and energy rose by 0.8 percent YoY, against expectations of 0.4 percent and 0.8 percent, respectively.

Key Notes

The national core consumer price index "confronts the Bank of Japan's position that the recent rise in prices is temporary and does not require a withdrawal of monetary support."

Analysts predict that Japan's core consumer inflation will remain above the BOJ's 2 percent target for the majority of this year due to rising fuel and food costs, which are being attributed to Russia's invasion of Ukraine and a weak yen that drives up the cost of imports.

However, there isn't much to be happy about for the BOJ, which sees such cost-push inflation as transient and a threat to consumption given that people are dealing with growing living expenses and sluggish wage growth.

BOJ Governor Haruhiko Kuroda has stated time and time again that the central bank will maintain its ultra-loose monetary policy until strong domestic demand and strong wage growth take the lead in driving inflation.

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