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2h ago

Japan Core Inflation Eases to 3.1% in July, Still Above BOJ Target

Markets now lean toward another BOJ hike this year, reflecting persistent underlying inflation.

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Bags of rice are seen at the entrance of a shop in Tokyo. Rice prices soared 90.7 percent in July year-on-year, but the rate of increase slowed from previous months
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Overview

  • Core CPI rose 3.1% year over year in July, down from 3.3% in June and slightly above the 3.0% consensus forecast.
  • The BOJ’s preferred core-core gauge, excluding fresh food and energy, held at 3.4%, underscoring firm domestic price pressures.
  • Rice inflation cooled to 90.7% in July as supermarket prices retreated from earlier peaks, helping ease food-cost strains.
  • A Reuters poll found 63% of economists expect the policy rate to reach at least 0.75% by year-end after January’s move to 0.5%.
  • Q2 GDP grew 0.3% quarter on quarter, though July exports saw their sharpest fall in over four years as shipments to the U.S. and China declined.