MNI BRIEF: Japan's May Trimmed Mean Rises 2.5% Vs. 2.4%

Japan’s trimmed mean measure of underlying inflation rose to 2.5% y/y in May, up from 2.4% in April, staying above the Bank of Japan’s 2% target for the fifth consecutive month, BOJ data showed Tuesday. 

The data indicate continued pass-through of cost pressures, particularly from high rice prices and rising labour costs. The release follows Friday’s figures showing annual core consumer inflation climbing to 3.7% y/y in May, the highest since January 2023's 4.2%, and marking the 38th straight month above the BOJ’s 2% target.

Tuesday’s data also showed the mode of the inflation distribution, the most common rate, slowed to 1.6% in May from 1.8% in April, reinforcing the BOJ's message that inflation is still uneven.

The BOJ has consistently noted that underlying CPI inflation remains in the 1.5%–2.0% range, still below the sustainable level needed to anchor expectations at the 2% target.

The Bank maintains its view that underlying CPI inflation is likely to reach a level generally consistent with its price stability target in the second half of the projection period ending March 2028. The Board held the policy rate at 0.5% last week. (See MNI BOJ WATCH: Ueda Flags Gradual Hikes, Warns Of JGB Risks)