Japan April inflation surges to over two-year high amid rising food prices

SINGAPORE (ICIS)–Japan’s core consumer price index (CPI) rose by 3.5% year on year in April, raising pressure on the central bank to continue raising interest rates, official data showed on Friday.

Headline inflation, which includes all items, climbed by 3.6% year on year in April, steadying from a month ago.

The Bank of Japan’s (BOJ) preferred measure of inflation, which excludes fresh food and fuel, rose 3.0% year on year in April, above the 2.9% gain recorded in March.

Japan’s inflation has remained above the central bank’s 2% target since April 2022, prompting policymakers to gradually increase interest rates.

In January, the BOJ raised its short-term interest rate to 0.5% from 0.25%, a sign of growing confidence in achieving its inflation target sustainably.

While the BOJ has indicated further rate hikes are likely, it must also weigh external pressures such as potential impacts from US tariffs against ongoing domestic price increases, particularly in food.