(Bloomberg) -- Japan’s key inflation gauge slipped in May, adding to pressure on the Bank of Japan, which faces a strengthening yen and forecasts that price gains will weaken further.
Consumer prices excluding fresh food rose by 0.8% in May from a year earlier, compared with economists’ median estimate of 0.7%, data from the internal affairs ministry showed Friday.
Key Insights
- Economists forecast inflation will slow further later this year, with lower mobile phone charges and free preschool education weighing on price growth. A sales-tax hike set for October will also pose a risk to consumption.
- With global central banks tilting toward interest rate cuts, the BOJ is already facing expectations it will move in a similar direction, particularly with inflation less than halfway to its 2% goal.
- Governor Haruhiko Kuroda said in an interview with Bloomberg this month that the BOJ still has room for big stimulus but cautioned that accumulating side effects also need to be considered.
What Bloomberg’s Economists Say
"Looking ahead, we expect core inflation (excluding fresh food) to slow toward autumn. Policy-related factors -- lower mobile phone service charges and reduced education costs -- are the major drivers."
--The Asia Economist TeamClick here to read more
Get More
- Overall, Japan’s consumer prices rose 0.7% in May, compared with economists’ median estimate of 0.7%.
- Stripping out energy and fresh food, consumer prices climbed 0.5%, also matching a median estimate.
