Tokyo inflation eases in June as energy costs cool

Inflation in Tokyo slowed for the first time in four months due to cooler energy price growth and waiver of some charges for households, Bloomberg reports. 

According to Japan’s Ministry of Internal Affairs and Communications, consumer prices excluding fresh food grew 3.1% on an annual basis in the capital in June. Overall inflation was also 3.1%, down from 3.4% in May.

Last month, the Japanese government resumed subsidies to push gasoline prices lower. It also took steps to reduce rice price, which more than doubled in May, including the release of emergency stockpiles. The average weekly price of rice has now fallen for four consecutive weeks, the Ministry of Agriculture reports. 

However, inflation remains above the Bank of Japan’s 2% target. Bloomberg economist Taro Kimura believes it will push the regulator to continue monetary tightening. Besides, inflationary pressure is expected to build up further as oil prices remain elevated due to Middle East tensions. Kimura projects a 25-basis-point hike in interest rates at the central bank's meeting in July.