Japan's core inflation hits 2-year high of 3.7% in May

Staple rice remains main driver, keeping pressure on BOJ's rate hikes

Bags of rice, Japan's staple food, are seen on the shelves at a supermarket in Miyazaki, Japan, on June 19. © Kyodo

June 20, 2025 09:55 JST

TOKYO (Reuters) -- Japan's core consumer prices rose 3.7% in May from a year earlier, data showed on Friday, marking the fastest annual pace in more than two years and keeping pressure on the central bank to resume interest rate hikes.

The data underscores the challenge the Bank of Japan faces in juggling mounting pressure from sticky food inflation and risks to the fragile economy from U.S. tariffs.