Inflation in Japan is HOT: Japan's CPI inflation excluding fresh food accelerated to +3.7% year-over-year in May, the fastest pace since January 2023. This marks the 6th consecutive monthly reading at or above 3%+. Rice prices surged a whopping +102% year-over-year, driving overall food inflation. Service prices, a gauge closely watched by the Bank of Japan, increased +1.4%, above the +1.3% seen in April. As a result, Japan’s inflation rate has now been at or above the BoJ’s 2% target for over 3 years. The BoJ likely has no option but to raise interest rates in July. Japan has an inflation issue.