Japan's Core Consumer Prices Rise 1.6% in June, Driven by Food Costs

Japan's core consumer prices rose 1.6% in June compared to the same month last year, driven by increasing food costs due to rising raw material prices. This marks a slight pick-up from May's 1.4% increase and is below 2% for the fifth consecutive month, according to data released by the Ministry of Internal Affairs and Communications.

The Bank of Japan will scrutinize this data ahead of its policy meeting next week, where it is expected to keep the policy interest rate steady after raising it to a 31-year high of 1.00% in June. The central bank will also release fresh outlooks for prices and economic growth, with attention on how it will assess the risks of inflationary pressures stemming from the ongoing Middle East crisis.

Takeshi Minami, chief economist at the Norinchukin Research Institute, expects inflation to increase further in the fall due to renewed tensions in the Middle East. He anticipates inflation will rise above 2% during the July-September period and near 3% during the second half of the fiscal year ending in March.