Japan's core inflation rises to 2-year high in May due to soaring rice prices

ISTANBUL

Japan's core consumer inflation jumped to a 28-month high of 3.7% year-on-year in May, led by high rice prices, according to official data.

Core inflation accelerated from the previous month's figure of 3.5%. The inflation rate has remained at or above the Bank of Japan's 2% target since April 2022.

The core CPI, which excludes energy and fresh food to reveal underlying pricing trends, increased 3.3% in May after rising 3% in April, according to the Ministry of Internal Affairs and Communications data.

Food prices, excluding fresh goods, rose 7.7%, accelerating from a 7% increase in April. A lack of rice caused prices to spike 101.7%, hitting a new record for the eighth consecutive month.

Energy prices climbed 8.1% in May, slowing from a 9.3% increase in April.

Prices for household durable goods climbed 3.8%, decelerating from 6.4% in April, due partly to weak demand for air conditioners.

As a result of abnormally hot summer weather that reduced yields and farmers passing on higher production costs to households, prices of Japanese rice have now been growing at a record rate for each of the last eight months.

While rising rice prices pushed inflation expectations higher, Japan was forced to import rice from South Korea for the first time in years.

May core CPI data signaled the difficulty the Bank of Japan (BoJ) faces in balancing the rising pressure of persistent food inflation and the risks posed by US tariffs on the economy.