Service industry contraction + accelerated inflation pose a double blow to the Japanese economy

Japan's economy is facing a double blow, with the service industry shrinking and inflation accelerating. In June, both the manufacturing and service sectors in Japan showed signs of slowing down, with the service industry experiencing contraction for the first time in nearly two years, mainly due to the pressure of rising costs. Inflation is also accelerating, with the national core CPI rising by 2.5% year-on-year in May, slightly lower than expected but reaching or exceeding the Bank of Japan's 2% target for the 26th consecutive month. The slowdown in service sector inflation may be affecting overall price levels, providing support for the Bank of Japan to consider raising interest rates. Despite the pressure on Japan's economy, the road to economic recovery is not smooth sailing