Japan's core inflation eases in June as rice price hikes slow

By Mucahithan Avcioglu

ISTANBUL (AA) - Japan's core consumer inflation cooled to 3.3% in June as rice prices saw a slight easing, according to official data released Friday.

Core inflation eased from a 29-month high of 3.7% in May and was below the market forecasts of 3.4% for the month.

The nation's headline inflation rate fell to 3.3% from 3.5% in May, but it was still above the Bank of Japan's 2% target for the 39th consecutive month.

The "core-core" inflation rate, which is monitored by the Bank of Japan and excludes the costs of energy and fresh food, rose to 3.4% in June from 3.3% in the previous month.

Rice prices slowed slightly to a 100.2% year-on-year rise as opposed to a 101.7% increase in May after rising at their quickest rate in more than 50 years.

As a result of abnormally hot summer weather that reduced yields and farmers passing on higher production costs to households, prices of Japanese rice grew at a record rate for eight months until May.

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

The easing inflation data still signaled the difficulty the Bank of Japan faces in balancing the pressure of food inflation and the risks posed by US tariffs on the economy.

US President Donald Trump also caused economic concerns in Japan after announcing 25% tariffs on all goods coming into the US as of Aug. 1.

On Wednesday, Trump said he does not anticipate a trade deal with Japan, despite Tokyo’s extensive efforts to reach an agreement.

As exports plummeted, Japan's economy in the first quarter shrank 0.2% quarter-on-quarter in the three months ending in March, marking the first decline in a year.

Automobiles are Japan's top export to the US, and the country faces a 25% levy on auto exports into the US. Auto exports to the US plummeted 26.7% in June, a sharper decline than May’s 24.7% decrease.