In Tokyo, core inflation continued its upward trend for the third consecutive month in July, as per data released on Friday. However, an index tracking demand-driven price growth decelerated, adding complexity to the central bank’s decision-making process regarding the timing of interest rate hikes.
The latest data was unveiled just ahead of the Bank of Japan’s two-day policy meeting scheduled to conclude on Wednesday. During the meeting, policymakers will deliberate on the possibility of raising interest rates and outline strategies for scaling back extensive bond purchases.
Tokyo’s core Consumer Price Index (CPI), excluding volatile fresh food costs, showed a 2.2% increase in July compared to the previous year, in line with market projections. This reflects a slight acceleration from June’s 2.1% uptick.
The boost in Tokyo’s CPI, recognized as a key indicator for national trends, was primarily driven by the discontinuation of government subsidies aimed at reducing utility expenses.
On the other hand, inflation measured by an index that excludes energy prices – closely monitored by the BOJ for broader price trend insights – dipped to 1.5% in July from 1.8% in June. This marks the slowest annual growth pace in almost two years, indicating a moderation in price rises attributed to subdued consumer spending.
