MNI POLICY: BOJ Doubts Swift Rice Price Drop In CPI

The year-on-year rise in Japanese rice prices within the CPI may slow in the coming months due to government stockpile sales, but a sharp or immediate drop is unlikely, and the impact will take time to filter through to the index's calculation, MNI understands.

The government began direct sales of rice stockpiles on Monday, aiming to bring retail prices down to around JPY2,000 per 5kg by early June.

Authorities track the price of several different rice varieties, but only a select number are used in CPI calculations. While rice prices not used in CPI calculations may decline due to the government's sales, officials believe the impact will take time to materialise for those included in the index, making a sharp drop unlikely. 

Rising rice prices have contributed to cost increases in the food service industry and processed food sectors. In June, the prices of 1,932 food and beverage items are set to rise, around triple the number from a year earlier, marking the sixth consecutive yearly increase, according to the Teiko Data Bank.

BOJ officials noted that service prices are continuing to rise steadily, driven by the pass-through of higher food costs and rising labour expenses following this spring’s wage negotiations. Goods prices also remain stronger than previously expected, suggesting CPI is unlikely to decelerate quickly and consumers will continue to face elevated price levels.