Japanese inflation spiked at a two-year high in April, data showed Friday, as rice prices almost doubled, turning focus on the central bank as it mulls more interest rate hikes amid Donald Trump's trade war.
The news also puts pressure on Prime Minister Shigeru Ishiba ahead of elections in July and after a minister was forced to resign over a gaffe about the national food staple while officials were forced to dip into emergency stockpiles.
Core inflation excluding fresh food hit 3.5 percent last month, the internal affairs ministry said, its highest since January 2023 and well up from the 3.2 percent in March.
Rice prices soared 98.4 percent year-on-year, slightly more than the previous month's increase.
The rocketing cost of a key part of Japanese people's diet is growing into a crisis for the government, which was already struggling to win popularity having lost its parliamentary majority in an election last year.
Factors behind the shortfall include poor harvests due to hot weather in 2023 and panic-buying prompted by a "megaquake" warning last year.
The government began auctioning its stockpile last month for the first time since it was started in 1995.
Excluding energy and fresh food, the consumer price index rose 3.0 percent, from to 2.9 percent in March, Friday's data showed, while the overall unadjusted figure was unchanged at 3.6 percent.
Underlying inflation has been above the BoJ's target rate of two percent for around three years and while the central bank began lifting interest rates last year it has paused them recently as it assesses the impact of Trump's tariffs.
With Japanese officials heading to Washington for more talks on slashing the U.S. president's tariffs, the Bank of Japan is holding off any more increases for now.
The BOJ warned at its last meeting this month that tariffs were fueling global economic uncertainty and revised down its economic growth forecasts for the country.
"Consumer price inflation will slow very gradually," said Stefan Angrick at Moody's Analytics. "U.S. tariffs and tariff threats will dampen growth in Japan and globally, further weighing down demand-driven price pressures. The Bank of Japan isn't done hiking, but it's not moving just yet. Tariff haze will keep the central bank on hold for the time being.
"We expect another rate hike in early 2026."
Marcel Thieliant at Capital Economics said that "weekly rice prices are showing signs of stabilization so rice inflation should start to soften again before long".
© 2025 AFP
7 Comments
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sakurasuki
Anyone still wondering why inflation measure is high in Japan? Anyone who go do groceries in Japan won't be really shock about that. What JGovt really do about it.
HopeSpringsEternal
No surprise then that Japan's interest rates are now also at an all-time high in the marketplace, the return one receives when buying a JGB.
BOJ is rapidly falling behind in raising their official policy rates and thus the inflation monster continues to grow, as 'credit' remains too loose. Free money days are OVER
kohakuebisu
The story mentions "core inflation without fresh food" and rice. From previous stories, I though inflation doesn't include "food", but this story suggests only fresh foods are excluded, meaning rice as dried food would factor in the official inflation number. The more essentials are included in the number, the more meaning the number will have.
Markets expect a rate hike and the yen is back up to 142.5.
WeiWei
This inflation has nothing to do with the BOJ rate. Increasing the rates will create more inflation as businesses need to recoup the loan costs from customers.
It did nothing in the US or other parts of the world except put even MORE people under. The underlying reason for this whole debacle is idiot covid lockdowns and idiot covid subsidies of free money, tune of hundreds of billions.
grc
WeiWei - increasing the policy rate DOES normally bring down inflation, as has happened in the States, Europe, the UK, Canada and so on and so forth. But rates are not the only way to go - everyone seems pretty much agreed that the fall in the yen has caused a lot of Japan’s inflation. Well, now the currency is 10% HIGHER than a year ago so that is bound to have an effect in the other direction in six to twelve months’ time
browny1
So the LDP and BOJ's plan to stick with Abenomics to increase inflation, dragging the country out of the mire of deflation, has paid off and the good citizens of Japan are now enjoying the social / economic benefits.
Everyone's rolling.
Just not sure what they're rolling in?
HopeSpringsEternal
Agreed the Covid lockdowns were a unique mess, even $trillions, but Japan now it's about normalizing rates to strengthen the currency and reduce the money supply/credit, both of which will act to slow inflation
No financial system can remain stable so long as inflation rates are far above lending rates, even the richest countries in the world like Switzerland get it and raise rates when needed. The real problem in Japan is the leveraged BOJ balance sheet, fueling money supply