Japan’s core inflation surged to 3.5% in April, boosted in part by rising rice prices. The central bank contemplates delaying rate hikes to study the impact of US tariffs. Core inflation, which excludes fresh food costs, was more than expected at 3.4%, according to experts surveyed by Reuters, marking the highest level since January 2023.
Headline inflation rose 3.6% from a year earlier, holding steady from the previous month and remaining beyond the Bank of Japan’s 2% target for over three years. Bank of Japan Governor Kazuo Ueda has indicated that he intends to hike interest rates in response to pricing patterns, while also emphasising the importance of closely monitoring the effects of US tariffs.
Japan has been dealing with increasing rice costs in recent weeks. The average price at 1,000 shops throughout the country continues to rise, with a 5-kilogram bag of rice costing 4,268 yen ($29.63) as of May 11. According to Masato Koike, an economist at Sompo Institute Plus, core inflation is projected to fall in the coming months as crude oil prices fall and the yen strengthens.
As observed during Trump’s first administration, an oversupply of food caused by U.S. tariffs might lead to reduced food costs, according to Koike, who also believes that the reinstatement of government subsidies for energy and gas bills in the summer will put downward pressure on inflation.
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