Core inflation in Japan rose to 3.7% in May, beating forecasts, with rice contributing significantly to the increase.

Japan's core inflation reached 3.7% in May, the highest level since January 2023, beating economists' forecasts. It marks the 38th consecutive month of exceeding the 2% target set by the Bank of Japan. Rising food prices, especially rice, play a crucial role in inflation, and the government's price-cutting measures could boost household spending. The central bank has decided to keep interest rates on hold at 0.5%, but will continue to raise them as inflation approaches its target. The Japanese economy contracted by 0.2% in the first quarter as exports fell.