Tokyo core inflation has been below the Bank of Japan's target for five consecutive months.

The data released on Friday showed that the year-on-year core inflation in Tokyo, the capital of Japan, in June has rebounded slightly, and the upward pressure on prices brought by the Middle East conflict is continuing to spread. This data will be a key reference for the Bank of Japan's policy meeting next month, during which the board will conduct a quarterly assessment of economic growth and inflation expectations. The data showed that the core consumer price index (CPI) in Tokyo, excluding highly volatile fresh food prices, rose by 1.6% year-on-year in June, higher than the 1.3% increase in May, and in line with market expectations. Another measure, the core CPI excluding fresh food and fuel prices, which the Bank of Japan closely monitors to gauge the medium- to long-term inflation trend, rose by 1.9% year-on-year in June, compared to a 1.6% increase in May. The Middle East conflict makes it difficult for the Bank of Japan to judge the timing and pace of interest rate hikes: higher energy prices will boost inflation, but as Japan's economy is heavily dependent on oil imports, rising oil prices will also suppress the domestic economy. The Bank of Japan raised interest rates this month to the highest level in 31 years as a significant step in the normalization process of monetary policy. The bank has signaled its readiness to further tighten monetary policy to actively curb the upward pressure on prices caused by the energy shock triggered by the conflict with Iran.