In June 2025, Japan's inflation rate decreased to 3.3% from a 29-month high of 3.5% in May. However, inflation remains above the central bank's target.
Decrease in Japan’s Inflation
Japan's inflation rate in June 2025 was recorded at 3.3%, a drop from 3.5% in May. This marks the 39th consecutive month that inflation has exceeded the Bank of Japan's target of 2%. The figures were published by Japan's Internal Affairs Ministry and aligned with economists' forecasts.
Stabilization of Rice Prices
Rice prices, a key driver of recent inflation in Japan, began to stabilize. In May, rice prices soared more than 101.7% year-on-year, but this rate slowed to 100.2% in June. The changes followed government interventions that released rice stockpiles to improve supply and dampen market speculation. However, high prices persist due to the 2023 harvest's poor conditions influenced by abnormal weather patterns.
Trump’s Tariffs and Economic Impact
Japan's economy faces uncertainties from external factors, notably US trade policy. President Donald Trump expressed his unwillingness to negotiate a trade deal with Japan, raising concerns about additional tariffs on Japanese goods, particularly cars. A 25% tariff on a broad range of Japanese goods is set to take effect on August 1, impacting exports. This comes amid a reported 0.2% drop in Japan’s GDP during the first quarter of 2025.
While there is a slight decrease in inflation for June, high prices and external threats such as US tariffs continue to put pressure on Japan's economy. The focus on the economic situation in the country remains crucial.
