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Tokyo Inflation Eases but Remains Above BoJ’s 2% Goal

The central bank will evaluate whether slower headline inflation masks stubborn domestic price pressures ahead of its July rate decision.

A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. REUTERS/Androniki Christodoulou
Bank of Japan Governor Kazuo Ueda attends a press conference after a BOJ policy meeting in Tokyo, Japan, May 1, 2025. REUTERS/Kim Kyung-Hoon/File Photo
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Overview

  • Tokyo’s core consumer price index excluding fresh food rose 3.1% in June from a year earlier, down from a 3.6% gain in May but still well above the 2% target.
  • The core-core index, which strips out both fresh food and fuel costs, also slowed to a 3.1% annual rise in June after a 3.3% increase in May.
  • Electricity inflation cooled to 5.3% year-on-year as energy subsidies resumed and gasoline prices fell 1%, while Tokyo waived water charges to ease household bills.
  • Service-sector inflation held at 2.1% in June, indicating that price gains are extending beyond volatile import-linked items.
  • After lifting rates to 0.5% in January, the Bank of Japan will weigh headline and underlying readings at its July 30–31 meeting and may raise borrowing costs further if wage-driven inflation persists.