Suppression of subsidies on energy prices keeps inflation in Japan stable.

Due to factors such as government subsidies lowering energy costs, Japan's core inflation data remained stable in May, and the Bank of Japan's path for further interest rate hikes within the year remains unchanged. The Ministry of Internal Affairs and Communications of Japan announced data on Friday, showing that the core consumer price index excluding fresh food rose by 1.4% year-on-year, in line with economists' expectations. Excluding fresh food and energy, the core CPI rose by 1.8% year-on-year, also meeting market expectations. The data indicates that Prime Minister Naoto Kan's policy to alleviate people's livelihoods has been effective, mainly relying on fuel subsidies to curb the rise in living costs. The cabinet has recently finalized a supplementary budget to continue easing the impact of the Middle East crisis on ordinary households in the coming months. The Japanese government has also taken measures to reduce child-rearing expenses. Despite the temporary peace agreement between the US and Iran, international oil prices remain high. Energy traders state that even if the transportation of crude oil and liquefied natural gas through the key shipping lane of the Strait of Hormuz returns to normal, it will take at least several months. The weakening yen continues to disturb Japan's price trends, with the average exchange rate of the yen against the US dollar being 158.24 last month, depreciating by over 8% compared to the same period last year, pushing up the cost of imported goods. In early trading on Friday, the exchange rate was approximately 161.31 yen to 1 US dollar in Tokyo, approaching a 40-year low, increasing the possibility of the central bank intervening in the market to stabilize the exchange rate.