Japan CPI inflation steady in May, core inflation below BOJ target in World Economy News 20/06/2026 Investing.com– Japanese consumer price index inflation grew as expected in May, with the core reading coming below the Bank of Japan’s annual target amid continued government measures to offset high energy prices. Friday’s data also comes just days after the BOJ hiked interest rates by 25 basis points and warned of energy-driven inflation risks in the coming months. Core CPI, which excludes volatile fresh food prices, grew 1.4% year-on-year in May, government data showed. The print was in line with expectations it would remain steady at 1.4% from last month. A core reading that excludes both fresh food and energy prices rose 1.8% in May, slowing from the 1.9% increase in the prior month. The print is used by the BOJ as a gauge of underlying inflation. Core inflation remained below the BOJ’s 2% annual target for a fourth consecutive month, and was also at its weakest level in four years. Headline CPI grew 1.5% in May from 1.4% in the prior month. Japanese CPI inflation has remained languid in 2026, chiefly due to government subsidies on fuel and utility costs to offset the impact of high energy prices stemming from the Middle East conflict. But producer price index inflation has risen sharply since March, driving up concerns that higher input prices for businesses will be eventually passed on to consumers, driving up CPI inflation. While the government’s fuel price caps have so far kept a lid on consumer prices, we expect the pass-through of higher energy costs to utilities charges and other goods and services to lift inflation to around 3.5% by early-2027,” Capital Economics analysts said in a note. The BOJ had warned of such a scenario when it raised interest rates this week. The central bank brought its benchmark rate to 1%– its highest level since 1995– and warned it was ready to hike further in the face of an expected pickup in inflation over the coming months. So