July 25, 2024, 7:01 am

Tokyo Inflation Rises: Potential Interest Rate Hike Looms

Sarakhon Desk
  • Update Time : Saturday, June 29, 2024

Tokyo’s Inflation on the Rise
Inflation in Tokyo increased in June, driven by higher energy prices, signaling a potential interest rate hike by the Bank of Japan (BOJ) as early as July. Consumer prices, excluding fresh food, rose by 2.1%, up from 1.9% in May, surpassing expectations.

Industrial Output Boost
Japan’s industrial output also saw a significant rise of 2.8% in May, beating the forecasted 2% growth. This increase is attributed to automakers, such as Daihatsu, resuming production after resolving a safety certification scandal.

Yen’s Impact and Policy Considerations
The weak yen has contributed to price growth, currently trading around ¥160.60 to the dollar. If the yen remains weak, it is likely that the BOJ will consider raising interest rates in July. The government’s decision to phase out utility subsidies and introduce a renewable energy levy has also influenced inflation figures.

Mixed Signals on Rate Hike
While some economists believe the inflation data supports a rate hike, others argue that there isn’t sufficient evidence yet. Factors such as rising energy prices, wage gains, and government income tax rebates may increase inflationary pressures in the coming months.

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