Japan - June Tokyo CPI

The sharp acceleration in CPI inflation of the last couple of months faded in June in Tokyo. Without a new driver emerging, it seems likely that national inflation is close to peaking, though JPY weakness will likely prevent inflation from falling too far.

Headline CPI in Tokyo for June fell back to 2.3% YoY from 2.4% in May. That was because of energy prices; excluding those and CPI inflation was higher in June, though core only accelerated by 0.1ppts.

Overall, and despite the weakness of the JPY, there are a few signs that inflation momentum is waning. This doesn't mean that core CPI won't rise a bit more quickly in the next couple of months - yesterday's Tankan shows there still is some upwards pressure. And the JPY weakness will likely keep a floor under $JPY for the time being. But without a new driver, it is feeling like inflation is likely to peak in the next 3M or so.