TOKYO, Aug 22 \u2014 Rice prices in Japan soared 90.7 per cent in July year-on-year, official data showed Friday, but the rate of increase slowed from previous months offering some relief for Prime Minister Shigeru Ishiba.<\/p>\n
Overall, Japan\u2019s core inflation rate eased to 3.1 per cent from 3.3 per cent in June, the data from the internal affairs ministry showed.<\/p>\n
But the rate remains above the Bank of Japan\u2019s two-per cent target, cementing expectations that it will hike interest rates in October.<\/p>\n
The reading, which excludes volatile fresh food prices, was slightly above market expectations of 3.0 per cent.<\/p>\n
Excluding energy and also fresh food, consumer prices rose 3.4 per cent, the same rate as in June.<\/p>\n
The BoJ has been reluctant to raise borrowing costs, seeing above-target inflation as caused by temporary factors.<\/p>\n
Earlier this month US Treasury Secretary Scott Bessent added to pressure on the BoJ to hike rates, saying the bank was \u201cbehind the curve\u201d on inflation.<\/p>\n
\u201cOur base case is a 25-basis-point rate hike at the October meeting,\u201d said Taro Kimura at Bloomberg Economics before inflation data was announced. He had predicted a reading of 3.0 per cent.<\/p>\n
Thin ice<\/p>\n
Ishiba has been on thin ice since disastrous upper house elections in July that saw his ruling coalition lose its majority.<\/p>\n
This came only a few months after his administration became a minority government in the more powerful lower house too.<\/p>\n
One of the main sources of voter anger has been inflation, and in particular the surging cost of rice.<\/p>\n
In June the price of the staple grain was 100.2 per cent higher than a year earlier. In May the rate was 101.7 per cent.<\/p>\n
Factors include a very hot summer in 2023, panic-buying after a warning of an imminent \u201cmegaquake\u201d in 2024, alleged hoarding by some traders, and a surge in rice-hungry tourists.<\/p>\n
Ishiba appointed a new farm minister and his government has released rice from emergency stocks in an effort to bring prices down.<\/p>\n
Earlier this month it announced a change in its decades-old policy of encouraging farmers to grow crops other than rice.<\/p>\n
US President Donald Trump also wants Japan to import more American rice to reduce Tokyo\u2019s trade surplus with the United States.<\/p>\n
Trade deal\u00a0<\/p>\n
Last week, data showed that Japan\u2019s economy, the world\u2019s fourth-biggest, grew at an annualised pace of 1.0 per cent in the second quarter.<\/p>\n
The reading suggested the economy was suffering less than expected from US tariffs imposed earlier this year.<\/p>\n
But other data released Wednesday showed exports to the United States plunging 10.1 per cent in July, with those of cars down 28.4 per cent.<\/p>\n
Trump initially imposed across-the-board tariffs of 10 per cent on Japan, as well as levies of 27.5 per cent on cars.<\/p>\n
Japan\u2019s automobile industry, which includes giants like Toyota and Honda, accounts for around eight per cent of the country\u2019s jobs.<\/p>\n
Japan last month secured a trade deal that cut threatened 25 per cent \u201creciprocal\u201d tariffs to 15 per cent.<\/p>\n
The rate on Japanese cars was also cut to 15 per cent, although to Tokyo\u2019s consternation, this has yet to take effect. \u2014 AFP<\/p>\n
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