Consumer prices in Japan grew 0.1% in May, exceeding a recent economist survey that forecasted prices to remain unchanged, Bloomberg reports.
With BoJ Governor Haruhiko Kuroda refusing to ramp up the bank’s stimulus efforts, all signs point to the yen’s recent weakness as one of the move’s main drivers. As the yen made its way to 13-year lows, imports to the nation became more expensive, helping to lift up prices domestically.
As a whole however, things aren’t looking that great for the BoJ. The persistent drop in the world’s oil prices would only exacerbate consumer price declines and its 2% inflation target remains as elusive as Waldo and Carmen San Diego’s slippery lovechild. Wage growth remains incredibly weak, and is a matter of concern according to Itochu Corp. economist Atsushi Takeda:
“We have to carefully watch to see if households welcome an increase in prices, (t)hey may still be in saving mode without much wage growth.”
The BoJ still has some room to move though, so they just might have something else in store.
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