Fuel Subsidies Keep Japan's Inflation In Check In May

Akira Ito
19 Jun, 2026
Tokyo

Stocks in Japan closed lower on Friday's trading, and investors reviewed the latest inflation update. 

The Nikkei 225 Stock Average decreased 0.4%, the broader TOPIX declined 1.0%, and the Japanese yen weakened to a new two-year low of 161.37 against the U.S. dollar. 

Japan's overall inflation edged up in May but stayed well below the central bank's target rate of 2% for the fourth consecutive month. 

Overall inflation accelerated to 1.5% from 1.4% in April, and the core rate, which excludes volatile food prices, held steady at 1.4%, according to the latest update from the Ministry of Internal Affairs & Communications. 

The government subsidies for energy products capped the upside for core inflation. 

Core-core inflation, which excludes food and energy prices, edged up 1.8% in May. 

Food prices, excluding fresh items, increased 3.5%, slower than a 4.1% rise in the previous month, and inflation slowed for the 10th consecutive month. 

Rice prices declined 4.9% and turned lower for the first time since November 2022 but stayed elevated, largely because of increasing inventory.

Earlier in the week, the Bank of Japan lifted its short-term rate to a 31-year high of 1.0%, and the consumer price data is among the key data points in deciding the rate actions to achieve its long-term inflation target of 2%. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.4% to 70,768.60, and the broader TOPIX declined 1% to 4,029.19. 

The global rally in semiconductor and AI-related stocks powered the local stocks higher, and financial, industrial, and consumer stocks traded down. 

Nippon Yusen decreased 2.1%, Kawasaki Kishen Kaisa declined 1.5%, and Mitsui O.S.K. Lines fell 1.6%. 

Sumitomo Mitsui Financial decreased 3.3%, Mitsubishi UFJ Financial dropped 2.9%, and Mizuho Financial fell 4%.