Tokyo Core Inflation Accelerates Amid Middle East Conflict
Japan's capital city Tokyo saw its annual core inflation accelerate in July, rising to 1.9% from 1.6% in June. The data suggests that the Middle East conflict is still putting upward pressure on prices, but the Bank of Japan (BOJ) may not raise interest rates again just yet.
The Tokyo Core Consumer Price Index (CPI), which excludes volatile fresh food costs, has been above 1% for six months in a row. Despite this, it remains below the BOJ's 2% target. The index rose faster than expected, beating a median market forecast of 1.7%. This increase was driven by continued price gains in food and daily necessities.
The service sector inflation rate remained steady at 1.1%, indicating that firms are taking their time to pass on rising labor costs to customers. The BOJ is closely watching the index, which strips away the effect of fresh food and fuel prices, as a better gauge of trend inflation. This index rose 2% in July, matching June's gain.