MNI BRIEF: Japan June Core CPI Rises 2.6% Vs. May +2.5%

The year-on-year rise of Japan's annual core consumer inflation rate accelerated to 2.6% in June from May’s 2.5% due to higher energy prices and firm food prices excluding perishables, data released by the Ministry of Internal Affairs and Communications showed on Friday.

June’s index stayed above the Bank of Japan’s 2% target for the 27th consecutive month.

Utility bills contributed more to inflation as government assistance aimed at electricity and gas customers reduces starting in May, which will be reflected in June spending.

The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) rose 2.2% y/y in June, also accelerating from May’s 2.1% and for the second straight acceleration.

Services prices, a key BOJ focus, rose 1.7% y/y in June vs. 1.6% in April.

BOJ officials judged that services prices continued to rise steadily as businesses are raising retail prices following wage hikes.

A former BOJ officials recently gave a July rate hike a 40% chance. (See MNI INTERVIEW: BOJ July Hike Probability 40% - Kameda)