Inflation in Japan rose above BOJ target for four months in a row in July

According to Japan’s Ministry of Internal Affairs and Communications, the core consumer price index (CPI), which excludes staple food prices, rose 2.4% in July from a year earlier. This was the largest increase in seven and a half years, following sharp rises in energy and materials prices.

The core CPI, Japan’s main measure of inflation, has risen for 11 consecutive months, exceeding the Bank of Japan’s (BOJ) 2% inflation target for four straight months.

Although inflation figures in Japan were above the BOJ’s target for four months in a row, the BOJ committee maintained its ultra-loose monetary policy.

At its monetary policy meeting on July 21, the BOJ decided to leave the policy rate at -0.1% and keep the 10-year government bond yield target at around 0% to support the economic recovery.

The BOJ also raised its inflation forecast for 2022, saying that the core CPI will rise by 2.3%, up from the previous forecast of 1.9%.

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