Japan’s inflation in June gives the Bank of Japan few reasons for immediate cheer. Headline and core inflation decelerated, even as supply-driven food price pressures remained high. Services price inflation, meanwhile, is stubbornly low, indicating that the “wage-price virtuous circle” is still not playing out in the economy.

A slight easing in consumer inflation is welcome news for the Japanese central bank, but stubbornly high food prices will be of concern for policymakers.

The report on producer prices adds to a mixed picture for inflation as the economy adjusts to the imposition of import tariffs.

The figure for June marks the fastest rate of inflation, which measures how quickly prices are rising, since January 2024.

A number of factors, including a lack of significant gains in auto prices, are masking the extent of the shift.

Japan's core inflation cooled to 3.3% in June, coming down from a 29-month high of 3.7% as rice inflation showed signs of easing. The figure — which strips out costs for fresh food — was in line with the 3.3% expected by economists polled by Reuters. Headline inflation in the country dropped to 3.3%, coming down from 3.5% in May.

Japan's core inflation slowed in June but stayed above the central bank's 2% target for well over three years, highlighting lingering price pressures that back market expectations for further interest rate rises.

President Donald Trump swept into office in January with a promise to tackle what he called the "inflation crisis" that had kicked off under his predecessor.