Core inflation in Tokyo, Japan, slowed for the second consecutive month but remained well above the central bank's target

Due to some temporary factors, the pressure of living expenses in Tokyo has eased for the second consecutive month. However, food inflation remains high, which continues to put pressure on Japanese Prime Minister Shigeru Ishiba, who suffered a historic defeat in the upper house election on Sunday.

Bloomberg, citing data released by the Japanese government on Friday (July 25), said that Tokyo's core consumer price index (CPI), which excludes fresh food, rose by 2.9% year-on-year in July, lower than 3.1% in June. The increase has dropped below 3% for the first time since March.

Economists had previously expected the core CPI increase to slow to 3%, as the Tokyo government's summer reduction of some water fees and the fall in energy prices were expected to exert downward pressure on inflation.

Consumer prices, excluding energy and fresh food, rose by 3.1% year-on-year, the same increase as the previous month and in line with economists' expectations. As Tokyo's price data is usually regarded as a leading indicator of the national inflation trend, it has drawn much attention from economists.

Although the decline in electricity and gas prices has pulled down overall inflation, the data still shows that households continue to face high living expenses. This may prompt the Bank of Japan to maintain its interest rate hike path if the economic performance meets expectations.

As a key driver of the price increase in Japan this year, the price of rice rose by 81.8% year-on-year, lower than the 90.6% increase in June. The Japanese government has taken a series of intervention measures, including the release of emergency reserve rice, to stabilize prices.