Tokyo’s core inflation reached 3.6% in May, marking its highest level in over two years and exceeding the Bank of Japan’s 2% target for three consecutive years.
The surge was driven primarily by rising food costs, with rice prices jumping an extraordinary 93.2%.
While this inflation pressure supports the case for potential interest rate increases, Japan’s factory output declined in April, creating a challenging balancing act for the central bank as it weighs inflation control against economic growth concerns amid potential U.S. tariff impacts.
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