Core Economic Indicators - Japan's core Consumer Price Index (CPI) excluding fresh food rose by 3.3% year-on-year in June, reaching 111.4, marking the seventh consecutive month of inflation above 3% [1] - The increase in food prices, particularly grains and processed foods, remains the primary driver of inflation, with ordinary japonica rice prices soaring nearly 100% and coffee beans rising by 40.2% [1] Economic Challenges - Wage growth has lagged behind inflation, with average wage growth at only 1.8%, leading to a decline in household consumption willingness and potentially exacerbating a "stagflation" cycle [2] - Over 60% of households have reduced non-essential spending, indicating a significant impact on consumer behavior due to rising living costs [2] Policy Responses - Government measures, such as gasoline retail subsidies, have slightly eased inflationary pressures by lowering energy costs, while a reduction in public high school tuition has contributed to a 0.2 percentage point decrease in CPI [1][2] - The Bank of Japan is expected to maintain its ultra-loose monetary policy despite inflation exceeding its 2% target, as weak wage growth and global economic slowdown present a dilemma for policymakers [2] Future Outlook - Analysts suggest that Japan must balance controlling imported inflation, stimulating wage growth, and resolving trade disputes to avoid the looming threat of stagflation impacting economic recovery [3]