TOKYO — Fresh economic data released Friday shows that core inflation in Japan’s capital city gained momentum in June, reflecting growing price pressures tied to the ongoing conflict in the Middle East.
The numbers are expected to be closely examined by the Bank of Japan when its board meets next month for a quarterly review of the country’s growth and price outlooks.
Tokyo’s core consumer price index — a measure that leaves out costs for volatile fresh food items — climbed 1.6% in June compared to the same month a year ago. That marks an increase from the 1.3% rise recorded in May and matched what analysts had predicted.
A separate index that removes both fresh food and fuel costs, which the Bank of Japan monitors closely as a more reliable indicator of underlying inflation trends, rose 1.9% in June, up from 1.6% in May.
The conflict in the Middle East has made it more difficult for the Bank of Japan to determine when and how quickly to raise interest rates. Higher energy prices are pushing inflation upward while at the same time putting strain on an economy that relies heavily on imported oil.
Earlier this month, the Bank of Japan raised interest rates to their highest level in 31 years — a significant move in its effort to return to more normal monetary policy. The bank signaled it could tighten rates further as it works to manage the inflationary effects of the energy shock stemming from the Iran war.
