Japan's May inflation at 1.4%, below target for fourth month

Japan's consumer prices climbed 1.4% in May, marking the fourth straight month below the Bank of Japan's 2% inflation target. Government subsidies on fuel, introduced to cushion the impact of rising energy costs amid the Middle East conflict, have helped temper price increases.

The overall inflation rate, excluding volatile food prices, remained unchanged from April. Energy prices continued to decline, falling 2.5% year-on-year in May, following decreases in previous months. This trend is attributed to the abolition of taxes on gasoline and diesel, aimed at alleviating the burden on households.

To further manage energy price surges, Japan has implemented subsidies to keep gasoline prices around 170 yen per liter. Additionally, the government approved a supplementary budget of 3.11 trillion yen (approximately 16.7 billion euros) in early June to address energy price hikes stemming from the conflict involving the United States, Israel, and Iran.

Meanwhile, the Bank of Japan recently increased its key short-term interest rates to 1%. This move, the highest in over 30 years, signals the central bank's efforts to control inflation risks associated with rising oil prices and a weakening yen.