Inflation in June in Japan stood at 3.3% year-on-year without fresh products, according to government figures published on Friday, thus marking a small acceleration compared to May (3.2%) in line with economists’ expectations. Also excluding energy, inflation in Japan last month reached 4.2%, a level slightly below the maximum observed in May (4.3%), the highest in four decades.
Fueled last year by rising energy prices and the simultaneous fall in the yen, Japanese inflation is showing some signs of resilience as companies are late in passing cost increases into their selling prices, in the sector of processed food products, for example. .
Maintain an ultra-accommodative monetary policy
The Bank of Japan (BoJ) is due to update its growth and inflation forecasts after its next monetary policy meeting next Friday. Economists expect the BoJ to significantly raise its inflation forecast for the current fiscal year 2023/24 which began on April 1, currently set at 1.8% excluding fresh food and 2.5% excluding fresh food and energy.
However, despite inflation having been hovering above its 2% target for over a year, the BoJ has maintained its ultra-accommodative monetary policy thus far, considering that conditions were not yet right for for Japan to achieve this goal in a sustainable manner. shape. BoJ Governor Kazuo Ueda reiterated that view earlier this week, dampening market speculation that the institution’s monetary tightening could begin this month.
Towards a slowdown in inflation
“The bar is high for monetary tightening” in Japan, given low inflation in recent decades and high level of public debt, Louis Kuijs, Standard & Poor’s chief Asia-Pacific economist, said in a recent note. Raising interest rates if inflation falls could go beyond an unwanted economic slowdown and trigger a “fiscal cataclysm.” Therefore, the BoJ is likely to proceed “cautiously”, according to this economist.
“It is quite clear that inflation will slow down from now on as price increases due to imports subside,” UBS Securities economist Masamichi Adachi also estimated, quoted by the Bloomberg agency. Inflation is still high today, but “this does not mean that the BoJ is going to make major changes” in its monetary policy, he added.
Source: BFM TV
