Japan's inflation, which increased notably in June due to weak exchange rate, will likely rise further towards the end of the year as more of the impact of yen weakness feeds through, Capital Economics Japan Economist Marcel Thieliant said.
However, due to persistent spare capacity in the economy and only limited growth in basic pay, underlying inflationary pressures are likely to remain subdued, the firm said.
According to the economist, inflation excluding food and energy, much of which is imported, is still negative and should remain so for some time.
Latest data released by the Ministry of Internal Affairs and Communications showed that Japan's core consumer prices increased at a faster-than expected annual rate of 0.4 percent in June, marking the fastest growth in a year. Sequentially, core consumer prices have increased for the third consecutive month.
At the same time, the headline inflation moved up 0.2 percent year-on-year during the month. Inflation has been driven by higher energy prices, which was mainly due to the impact of the weaker yen on the cost of imported fuels.
The Tokyo core inflation for the month of July accelerated to 0.4 percent from 0.2 percent in June. CPI inflation for Tokyo also rose to 0.4 percent from 0.2 percent.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.