Japan Core Inflation Climbs to Highest Level Since January 2023

Japan’s core consumer price index, which excludes fresh food but includes energy, rose 3.7% year-on-year in May 2025, accelerating for the third straight month to the highest level since January 2023.

The figure also topped market expectations of a 3.6% increase, reinforcing expectations that the Bank of Japan may further tighten monetary policy to address persistent inflationary pressures.

Earlier this week, the BOJ left its benchmark interest rate unchanged at 0.5%, but noted in its policy statement that businesses continue to pass wage increases onto prices, supporting elevated core inflation.

Governor Kazuo Ueda reiterated the central bank’s commitment to closely monitoring both domestic and international conditions, signaling that additional rate hikes remain on the table if inflation persists.