Overview

• Japan’s core inflation rate climbed to 3.7% in May, marking its highest reading since January 2023 and the 38th consecutive month above the Bank of Japan’s 2% target.
• The Bank of Japan maintained its policy rate at 0.5% in June but signaled that persistent price increases could trigger a future rate hike once underlying inflation proves sustainable.
• Rice prices more than doubled year on year because of supply chain disruptions, hoarding and lingering harvest shortfalls, prompting authorities to tap emergency government stockpiles.
• Prime Minister Shigeru Ishiba has pledged 20,000-yen cash payments for every citizen and doubled the amount for children to help households manage rising living costs ahead of July’s upper-house elections.
• A 0.2% GDP contraction in the quarter to March underscores the challenge of balancing economic growth with price stability in the context of global trade tensions and Middle East conflicts.