Japan's inflation rose to 1.7 percent in June, and the pickup came from energy while the underlying rate kept easing
Japan's consumer prices rose 1.7 percent in the year to June. The Statistics Bureau published the figure on Friday, up from 1.5 percent in May and the fastest reading since February. The core index, which excludes fresh food and is the number the Bank of Japan tracks, rose to 1.6 percent from 1.4 percent. That is its first increase since March.
Underneath those two numbers is a third that moved the other way. The index that excludes both fresh food and energy, the cleanest available read on domestic price pressure, eased to 1.7 percent from 1.8 percent, and it has now slowed every month this year from 2.6 percent in January. So the two measures that carry energy sped up, and the one that does not carry it slowed. The pickup is in the volatile components, not in the underlying trend.
The energy in the data is the same energy in every other story this week. Kerosene rose 16.5 percent over the year, one of the larger single contributors in the fuel and utilities group. Crude has traded above $100 a barrel since Thursday, after attacks on shipping in the Red Sea, and Japan imports almost all of the oil it burns. An oil shock reaches a country like that through the import bill first and the price index soon after.
Not everything pushed up. Education fell 10.6 percent over the year and subtracted more from the headline than any other category, the result of a government move that made high school tuition free. Private high school tuition alone was down 68.8 percent. Strip that policy out and the headline rate would read higher than 1.7 percent.
The Bank of Japan meets on July 30 and 31. It raised its policy rate to 1.0 percent in June, the first move since December, and June gives it a mixed signal rather than a clear one. Inflation led by imported energy and pulled down by a tuition subsidy is not the profile that argues domestic prices are reaccelerating, which is the reading that would force the board's hand.
