By Leika Kihara
TOKYO, Aug 4 (Reuters) – Japan has seen only moderate rises in consumer prices so far with the pass-through of higher costs from the Middle East conflict remaining limited, Economy Minister Minoru Kiuchi said on Tuesday, offering a sanguine view on inflationary risks.
The assessment contrasts with that of the Bank of Japan, which last week issued its strongest warning to date on the risks of inflation overshooting its 2% target.
“The overall consumer price index rose 1.7% year-on-year in June, showing only moderate rises,” Kiuchi told a news conference, when asked about the BOJ’s warning.
“We do need to be vigilant to the possibility that costs could be gradually passed onto food and other consumer goods from summer through autumn,” he added.
But average real wages are expected to increase nearly 1% during the current fiscal year ending in March 2027, Kiuchi said, stressing the government’s focus on cushioning the hit to households from rising inflation through fuel subsidies.
“We hope the BOJ continues to guide appropriate policy to stably and sustainably achieve its 2% inflation target,” said Kiuchi, who is known as an advocate of loose monetary policy.
Kiuchi has attended the BOJ’s recent policy meetings including last week and in June, when the central bank raised interest rates to a 31-year high of 1%.
At the June meeting, Kiuchi said the BOJ must be held accountable for its decision and respond nimbly if the economy faced “extreme volatility,” a summary of opinions at the meeting showed, remarks markets saw as signalling the government’s reservations over the central bank’s rate-hike plans.
(Reporting by Leika Kihara; Editing by Christian Schmollinger and Shri Navaratnam)
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