Japan’s inflation in June gives the Bank of Japan few reasons for immediate cheer. Headline and core inflation decelerated, even as supply-driven food price pressures remained high. Services price inflation, meanwhile, is stubbornly low, indicating that the “wage-price virtuous circle” is still not playing out in the economy.

A slight easing in consumer inflation is welcome news for the Japanese central bank, but stubbornly high food prices will be of concern for policymakers.

Critics of President Trump's tariff policies have been waiting for the import taxes to raise the inflation rate. That effect may be beginning.

The figure for June marks the fastest rate of inflation, which measures how quickly prices are rising, since January 2024.

A fresh report on Tuesday marked two consecutive months of rising inflation. Consumer prices rose 2.7% in June compared to a year ago, marking a notable surge of price increases as President Donald Trump's tariff policy took hold and some retailers warned they may pass some of the tax burden onto shoppers.

The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.

The report on producer prices adds to a mixed picture for inflation as the economy adjusts to the imposition of import tariffs.

A number of factors, including a lack of significant gains in auto prices, are masking the extent of the shift.