Expert: Tokyo inflation to slow slightlyーNHK WORLD-JAPAN NEWS
here is some of the news we’ll be tracking in the week ahead On Tuesday we’ll get numbers on German sentiment when the EPO Institute for Economic Research releases its business climate index for June The figure has improved for the previous five months straight And on Friday Japan’s internal affairs ministry will release the Tokyo consumer price index for June Now price trends in the capital are considered a leading indicator of nationwide inflation The Tokyo prices for May rose a preliminary 3.6% from a year earlier That’s up 2/10en of a percentage point from April The figure excludes fresh food Kumano Hideo of the Dichu Life Research Institute expects the June figure will be about onetenth of a point lower than the May number A slight drop in crude oil prices led to lower costs for petroleum products A major factor behind overall inflation is import prices Now they are moving toward a minor decrease I predict that a slowdown in import price inflation will probably help lower Tokyo’s CPI slightly Kumano says that even as the pace of inflation may moderate soaring costs for food are likely to keep overall rates high Fresh food prices have continued to rise 7 to 8% since around 2022 Factors such as global warming and abnormal weather have been raising overall prices of food In the case of Japan weakening of the yen has progressed in sync with this Therefore price hike pressure has been high in the country compared to other countries Engle’s coefficient or the proportion of household spending on food has become around 30% the highest among G7 members While Japan has struggled with deflation for decades consumer price increases are now outpacing inflation in every G7 economy Kuano expects Japan consumer prices to remain high He says the government and central bank have not been helping to cool inflation Some in the government do not share the idea of achieving a stronger yen through monetary tightening to fight price hikes The Bank of Japan’s rate hikes have been carried out in an extremely moderate pace about once in 6 months or twice a year Therefore the currency depreciates and that pushes up prices for imports and commodities Kumano warns that unless price gains stabilize Japan’s real consumption will not increase and that will add downward pressure on economic growth toward the end of 2025 I’m John Lu and that wraps it up for this week’s Bis Picks
As Japanese consumers face the G7’s highest inflation rates, an economist expects the Tokyo Consumer Price Index for June to show increases are slowing very slightly. He also sees prices continuing to rise at a high pace this year.
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