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Investing.com-- Tokyo consumer price index inflation cooled more than expected in June, raising some questions over whether the Bank of Japan did have enough headroom to hike interest rates further in the coming months.
Tokyo Core CPI, which excludes volatile fresh food prices, grew 3.1% year-on-year in June, compared to expectations of 3.3%, government data showed on Friday. The print also cooled from the 3.6% seen in the prior month.
A core CPI reading that excludes both fresh food and energy prices also fell to 3.1% in June from 3.3% in the prior month. The reading is closely watched by the BOJ as a gauge of underlying inflation.
Headline CPI inflation slowed to 3.1% in June from 3.3% in the prior month.
Tokyo inflation data usually heralds a similar trend from nationwide inflation, with Friday’s data suggesting that inflation cooled from recent peaks in June. Data last week showed Japanese CPI inflation hit an over two-year high in May.
A series of stronger-than-expected CPI prints in recent months ramped up bets that an interest rate hike by the BOJ was imminent.
But BOJ officials dismissed such speculation, flagging heightened uncertainty over the Japanese economy and the impact of U.S. trade tariffs.
The central bank had also tempered its inflation and economic growth outlook for the year, citing increased risks from U.S. trade tariffs.
Friday’s data also indicated that Japanese personal consumption, a key inflation driver in recent months, may be cooling faster than initially expected, especially as bumper wage hikes from earlier in the year are baked into the economy.