Tokyo CPI inflation grows as expected in May, but remains sluggish

Investing.com-- Tokyo consumer price index inflation grew as expected in May amid some pick-up in spending, but still remained around levels that spurred persistent doubts over the Bank of Japan’s plans to raise interest rates further this year. 

Core CPI inflation- which excludes volatile fresh food prices, grew 1.9% in May, official data showed on Friday. The reading was in line with expectations and picked up from the 1.6% seen in April.

Headline CPI inflation grew 2.2%, improving from the 1.8% seen in April. 

A core inflation reading that excludes both fresh food and energy prices, and is watched closely by the BOJ, fell to 1.7% in May from 1.8% in the prior month, remaining well below the BOJ’s 2% annual target. 

Tokyo inflation data usually acts as a bellwether for nationwide inflation in Japan, with May’s reading suggesting that consumer spending picked up only marginally through the month.

The reading also comes just a few days after nationwide CPI data showed inflation grew less than expected in April.

The laggard inflation readings presented more doubts over the BOJ’s ability to raise interest rates further this year, given that inflation was struggling to remain at the central bank’s 2% annual target. 

The soft inflation figures come amid a sharp slowdown in Japanese consumer spending over the past few months, which also factored into softer-than-expected economic growth figures for the first quarter.