(C) Reuters. FILE PHOTO: A man looks at a shop at the Ameyoko shopping district in Tokyo, Japan, May 20, 2022. REUTERS/Kim Kyung-Hoon
By Kantaro Komiya and Leika Kihara
TOKYO (Reuters) – Japan’s annual core consumer inflation topped the central bank’s target for a second straight month in May, data showed on Friday, highlighting the intensifying pressure on the country’s fragile economy from soaring global raw material costs.
The data challenges the Bank of Japan’s view that the recent rise in prices is temporary, and doesn’t warrant a withdrawal of monetary stimulus.
The nationwide core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 2.1% in May from a year earlier, data showed, matching a median market forecast.
It stayed above the BOJ’s 2% target for a second straight month, following a 2.1% rise in April.
The core-core CPI, which strips away both volatile food and fuel costs, was up 0.8% in May from a year earlier after climbing by the same pace in April.
Rising fuel and food prices, blamed on Russia’s invasion of Ukraine and a weak yen that inflates the cost of imports, are expected to keep Japan’s core consumer inflation above the BOJ’s 2% target for most of this year, analysts say.
But there is little to cheer for the BOJ, which views such cost-push inflation as temporary and a risk to consumption, with households facing rising living costs and slow wage growth.
BOJ Governor Haruhiko Kuroda has repeatedly said the central bank will keep monetary policy ultra-loose until robust domestic demand and strong wage growth become key drivers of inflation.
Japan’s May consumer inflation tops BOJ target for 2nd straight month