Japan's prices climb by most in two years ahead of election
Japan's key consumer inflation measure accelerated to a fresh two-year high as Prime Minister Shigeru Ishiba gears up for a summer election and the Bank of Japan mulls the country's price trajectory.
Consumer prices excluding fresh food quickened for a third month to 3.7% from a year earlier in May, according to an internal affairs ministry's release Friday. That's the fastest pace since January 2023 and above a 3.6% median estimate of surveyed economists.
Food inflation was again a major driver with the price of rice, the nation's staple food, jumping 102% from a year earlier. Service prices — a metric closely watched by the BOJ — rose 1.4% from a year earlier, slightly more than 1.3% in April.
The report comes as Ishiba's minority government and opposition parties debate how to reduce the pain of rising living costs, which contributed to the ruling party's biggest election setback since 2009 last fall.
Elevated price growth has also supported the Bank of Japan's posture for a rate hike as it awaits clarity on U.S. tariff measures and their economic impact. Japan's inflation has been running at the fastest pace among Group of Seven nations of late, and has stayed at or above the BOJ's 2% target for more than three years.
With an Upper House election expected to be held on July 20, Ishiba has pledged cash handouts to households, while opposition parties are calling for a first-ever cut to Japan's sales tax. To quell public discontent from soaring rice prices, the government has taken a host of measures to bring down the cost of the grain, helping prop up its popularity from a record low in a local media poll.
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