Japan Inflation Steady

Japan's core inflation came in line within expectations. Headline inflation strengthened marginally, but "core-core" inflation eased slightly. The Bank of Japan earlier this week had highlighted concern over high energy prices. 4% in May, matching expectations and suggesting that underlying price pressures remained contained despite concerns that higher energy costs could push inflation higher.

4% expected by economists polled and unchanged from April. 9% in April. The inflation data comes as the Bank of Japan raised interest rates to their highest level since 1995 and warned of a possibility that its key "underlying inflation" metric may overshoot its 2% target due to high energy prices. 9% dip in April.

While households have been relatively shielded from rising prices by government support measures, businesses have faced stronger cost pressures. 3% in May, marking its fastest pace of increase in more than three years, driven largely by higher energy costs. "The price pass-through stemming from the rise in crude oil prices has been progressing at a relatively fast pace in business-to-business transactions, which could spread to an increase in consumer prices across a wide range of items," the central bank noted.

The yen has also remained under pressure, trading near the 160-per-dollar level despite intervention by the country's finance ministry and the Bank of Japan's rate increases. A weak yen would increase inflation, especially in a time where Tokyo needs to use dollars to buy energy to cope with the fallout of the Iran war. This is breaking news, please check back for updates.