Japan Core Inflation Edges Up, Still Below Target Amid Global Pressures

Japan's core inflation accelerated in June, rising to 1.6% from the previous year, but still fell short of the Bank of Japan's (BOJ) 2% target for a fifth consecutive month.

The increase was largely driven by the base effect of plummeting petrol prices in 2025 due to government subsidies, which has since rebounded.

However, analysts expect consumer inflation to pick up pace later this year as rising producer prices, fueled by increasing fuel and import costs from the Middle East conflict and a weak yen, filter through the economy.

Moody's Analytics economist Sarah Tan said that 'the inflation outlook will largely depend on developments in the Middle East and their impact on global commodity prices.'