As per a Bloomberg report, the Ministry of Internal Affairs and Communications reported on Friday that the consumer price index, which does not include fresh food, increased 1.6% in June compared to the same month last year.
Both the overall CPI and a measure that does not include fresh food and energy, which the BOJ regularly monitors as a measure of underlying inflation, increased by 1.7%.
Energy costs, which continued to decline thanks to government subsidies but at a far slower rate than in the previous month, were the main cause of the acceleration.
After raising the benchmark to its highest level since 1995 last month, the data backs up the BOJ’s argument to keep raising interest rates. Policymakers, who are already cautious about upside inflation risks, are becoming even more concerned due to the yen’s unrelenting decline, which saw it plummet overnight to a new four-decade low versus the dollar.
Nevertheless, when the central bank convenes again on July 31, it is generally anticipated that rates will remain unchanged. The Prime Minister Sanae Takaichi administration’s propensity for accommodative policy must be balanced with inflation pressure, and officials usually prefer to wait to evaluate the effects of their most recent action before making another change.
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(Edited by : Juviraj Anchil)
