Japan: Inflation declines to lowest level since November 2024 in May
Latest reading: Inflation ticked down to 3.5% in May, from April’s 3.6%. May’s reading marked the weakest inflation rate since November 2024, but remained above the Bank of Japan’s 2.0% target and marked the highest figure in the G7. Moreover, core inflation rose to 3.7% in May from April’s 3.6%, with rice prices soaring over 100% as a result of a poor harvest and rising tourist demand. Energy prices also continued to rise sharply as the government pares back subsidies for gas and electricity.
Meanwhile, annual average inflation rose to 3.2% in May (April: 3.1%).
Lastly, consumer prices rose 0.31% in May over the previous month, broadly stable from April’s 0.36% increase.
Panelist insight: EIU analysts said:
“We have revised up our consumer price inflation forecasts from 2.7% to 3.2% for 2025 and from 1.4% to 1.7% for 2026, as recent data pointed to persistently strong food price pressure. We have also adjusted our producer price inflation forecasts for 2025 to 3.4% (from 2.4%) and 1.6% (from 0.8%).”