Japan's Inflation Accelerated In May, Manufacturing Growth Slowed but Expanded for the Second Month

Akira Ito
21 Jun, 2024
Tokyo

Stocks in Tokyo traded higher after consumer price inflation accelerated in May. 

Consumer price inflation in Japan accelerated to an annual pace of 2.8% in May from 2.5% in April, the Ministry of Internal Affairs and Communications said in a report on Friday. 

Consumer inflation accelerated to a three-month high after electricity prices soared 14.7% from a decline of 1.1% in the previous month, following the ending of energy subsidies. 

Electricity prices rose for the first time after falling for the previous 15 consecutive months. 

Meanwhile, food price inflation stayed elevated at a 4.1% annual rate compared to 4.3% in the previous month, transportation prices advanced at a 2.3% rate compared to 2.7%, and housing prices rose 0.6%, matching the rate in the previous month. 

Core inflation, which excludes food prices and includes energy prices, rose at an annual pace of 2.5%, higher than the three-month low of 2.2% in the previous month. 

In other economic news, the au Jibun Bank Japan Manufacturing PMI decreased to 50.1 in June from the final 50.4 in May, indicating a slowdown in growth in the sector. 

Despite the growth slowdown, the manufacturing sector expanded for the second month in a row after contracting since May 2023. 

The yen continued to drift lower in Friday's trading and hovered at 158.95 against the dollar, prompting fears of another market intervention by the Bank of Japan and the ministry of finance. 

Separately, the People's Bank of China weakened the yuan to 7.1196 against the dollar, following the sharp selloff in overnight trading. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average decreased 0.1%, and the Topix index rose 0.02% to 2,726.23. 

For the week, the Nikkei advanced 1.3% and the Topix index rose 0.7%. 

Tech stocks closed down following the weakness in artificial intelligence-linked stocks in overnight trading in New York. 

Advantest, Tokyo Electron, and Screen Holdings declined between 1% and 2%. 

Banks traded higher despite the yen trading near the intervention level. 

Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial gained between 0.3% and 1.1%. 

Among other widely held stocks, IHI Corp. jumped 6.5% to ¥4,020.0, Otsuka Holdings jumped 2.8% to ¥6,388.0, and Sumitomo Metal Mining gained 3.9% to ¥5,046.0.