Kiuchi Sees Limited Inflation Risk, Warns of Gradual Cost Pass-Through

Japan's Economy Minister Minoru Kiuchi expressed a relatively sanguine view on inflationary pressures, saying the pass-through of rising costs from the Middle East conflict onto consumer goods prices has remained limited so far. He pointed to Japan's overall June Consumer Price Index (CPI), which rose 1.7% year-on-year, describing this increase as moderate.

Kiuchi acknowledged that food prices could see gradual increases from summer through autumn and expressed concern about the possibility of rising costs being gradually passed onto consumer goods during this period. He noted that the government shares the Bank of Japan's forecast that consumer inflation will accelerate in the latter half of this year before slowing.

The minister also emphasized the importance of close communication between the fiscal and monetary authorities, expressing hope that the BOJ conducts policy appropriately to achieve its 2% inflation target in a stable and sustainable manner. Kiuchi declined to comment on a specific Foreign Exchange (FX) level but said he is watching closely how currency moves affect both the broader economy and price levels.