TOKYO, Aug 4, 2026 – Japan's Economy Minister Minoru Kiuchi stated on Tuesday that the pass-through of rising costs from the Middle East conflict to consumer goods prices has remained limited so far, reflecting only moderate inflationary pressures.

Kiuchi noted, "The overall consumer price index rose 1.7 per cent year-on-year in June, showing only moderate rises," responding to the Bank of Japan's (BOJ) recent warning about the risks of inflation overshooting its 2 per cent target.

He cautioned, "We do need to be vigilant to the possibility that costs could be gradually passed onto food and other consumer goods from summer through autumn."

Despite this, Kiuchi expressed optimism about wage growth and government support measures, stating that average real wages are expected to increase nearly 1 per cent during the current fiscal year ending in March 2027. He emphasized the government's efforts to cushion households from inflation impacts through fuel subsidies.

Kiuchi, known as an advocate of loose monetary policy, also expressed hope that the BOJ "continues to guide appropriate policy to stably and sustainably achieve its 2 per cent inflation target."

He has attended recent BOJ policy meetings, including the one in June when the central bank raised interest rates to a 31-year high of 1 per cent. At that meeting, Kiuchi remarked that the BOJ must be held accountable and respond nimbly if the economy faced "major volatility," signaling some government reservations over the central bank's rate-hike plans.

This assessment by Kiuchi contrasts with the BOJ's strongest warning to date on inflation risks, highlighting a cautious but sanguine government stance amid ongoing global uncertainties.

Sources