FX.co ★ Japan Core Inflation Climbs to Highest Level Since January 2023

Japan's core consumer price index, excluding fresh food but including energy, experienced a 3.7% year-on-year increase in May 2025. This marks the third consecutive month of acceleration, reaching its highest level since January 2023. The rise exceeded market forecasts of a 3.6% increase, fueling anticipation that the Bank of Japan may consider further tightening its monetary policy to combat ongoing inflationary pressures. Earlier this week, the Bank of Japan maintained its benchmark interest rate at 0.5%. In its policy statement, the bank noted that businesses are continuing to transfer wage increases to consumer prices, thus supporting elevated core inflation. Governor Kazuo Ueda reaffirmed the central bank's vigilance in closely observing both domestic and international conditions, suggesting that additional rate hikes could be implemented if inflationary trends persist.