Japan’s Core Inflation Surges to 28-Month Peak
(MENAFN) Japan’s core consumer inflation surged to a 28-month peak of 3.7% year-on-year in May, driven primarily by soaring rice prices, as reported by official figures.
This marked an acceleration from April’s inflation rate of 3.5%, maintaining a level well above the Bank of Japan’s (BoJ) 2% target since April 2022.
The core Consumer Price Index (CPI), which excludes volatile items such as energy and fresh food to reveal more stable price trends, rose by 3.3% in May. This followed a 3% increase in April, according to data from the Ministry of Internal Affairs and Communications.
Food prices—excluding fresh items—jumped 7.7% in May, up from a 7% rise the previous month. Rice prices, in particular, spiked a staggering 101.7%, setting a new record for the eighth consecutive month due to a shortage caused by adverse weather conditions and rising production costs.
Energy prices also saw an increase, climbing by 8.1% in May, although the pace slowed from a 9.3% rise in April.
Meanwhile, the price of household durable goods rose 3.8%, a deceleration from April’s 6.4% jump, attributed partly to weak demand for air conditioners amid an early summer.
The ongoing rise in rice prices has been particularly damaging, exacerbated by unusual summer heat that reduced crop yields and forced farmers to pass on higher production costs to consumers. This has driven Japan to import rice from South Korea for the first time in years, highlighting the severity of the situation.
The sharp spike in rice prices has sparked heightened inflation expectations across the nation. In turn, this presents a significant challenge for the Bank of Japan (BoJ), which is grappling with the dual pressures of persistent food inflation and the broader economic risks posed by external factors, including potential US tariffs.
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