Japan Core Inflation Accelerates Amid Middle East Conflict and Weak Yen

Japan's core inflation rate accelerated in June to 1.6 percent, according to official data released on July 24. This is a slight increase from May's reading of 1.4 percent and meets market expectations.

The main drivers of this inflation are the higher costs of imported energy products due to the Middle East conflict, which has strangled the Strait of Hormuz. Additionally, Japan's weak yen has increased the cost of imports like oil and food for the resource-poor country.

Prime Minister Sanae Takaichi has introduced fuel and energy subsidies to shield consumers from the sharp rise in oil prices caused by the conflict. Excluding food and energy prices, inflation eased to 1.7 percent from 1.8 percent in May.