MNI BRIEF: Japan May Core CPI Rises 2.5% Vs. April +2.2%

The year-on-year rise of Japan's annual core consumer inflation rate accelerated to 2.5% in May from April’s 2.2% due to the increase in energy, data released by the Ministry of Internal Affairs and Communications showed on Friday.

May’s index stayed above the Bank of Japan’s 2% target for the 26th consecutive month. The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) rose 2.1% y/y in May, slowing from April’s 2.4% and for the first acceleration in nine months.

Services prices, a key BOJ focus, rose 1.6% y/y in May, slowing from 1.7% in April.

But bank officials judged that services prices rose steadily as businesses are raising retail prices following wage hikes. Policymakers saw the possibility that the weak yen has increased import prices and then pressure on firms to raise prices again, which in turn will increase the upside risk to prices.

The BOJ board next meets July 30-31.