Japan inflation unchanged in May after BoJ rate hike

TOKYO

Japan’s core inflation was unchanged in May from April, government data showed on June 19, days after the central bank hiked rates to a 31-year high in the wake of the Middle East war.

The year-on-year rise in “core” consumer prices of 1.4 percent, which excludes fresh food, was in line with market expectations.

Excluding energy as well as fresh food, the reading was 1.8 percent, down from to 1.9 percent in April and in line with market forecasts.

Unadjusted, inflation was 1.5 percent, down from 1.4 percent and also meeting forecasts.

The Bank of Japan raised its benchmark rate this week by 25 basis points to 1 percent, the highest since 1995 and marking the first increase since December.

The European Central Bank and Indonesia have hiked rates this month after the war pushed up prices for oil and other goods worldwide.

The U.S. Federal Reserve on June 17 held rates steady.

But with U.S. inflation at a three-year high, expectations are growing that its policy rate will rise later this year, despite pressure from President Donald Trump to cut.

Australia’s central bank, which has raised borrowing costs three times this year, also held rates steady this week as did the Bank of England.