Japan core inflation holds at 1.4% in May as subsidies keep energy costs down

Japan’s core CPI rose 1.4% year on year in May, unchanged for several months as government fuel subsidies continued to restrain energy prices. The Bank of Japan has lifted its policy rate to 1%, the highest level since 1995, and has signaled it is prepared to tighten further. The yen slid to 161.31 per dollar, near a 40-year low, heightening concerns about possible intervention. Ongoing Middle East risks and a slow recovery in shipments through the Strait of Hormuz, combined with the weaker yen, have kept pressure on Japan’s imported energy costs.