According to the Zhitong Finance APP, inflation in Tokyo accelerated compared to last month, reaching its highest level in two years. This situation supports the Bank of Japan’s stance on interest rate hikes, while also complicating the Bank of Japan’s decision-making due to uncertainties brought about by U.S. tariff measures.
According to a report released by Japan’s Ministry of Internal Affairs on Friday, in April, the consumer price index (CPI) excluding fresh food rose by 3.4% year-on-year. A combination of factors, including last year’s tuition fee reductions and rising food and energy costs, drove the acceleration of inflation. This result exceeded the median expectation of economists, which was 3.2%. The overall inflation rate in Tokyo also accelerated from 2.9% in March to 3.5%.
Tokyo’s inflation data is often seen as a leading indicator of national price trends. At this time, the uncertainty brought about by the tariff actions initiated by U.S. President Donald Trump is putting pressure on the Bank of Japan’s plans to further reduce monetary easing through gradual interest rate hikes.
The inflation rate has remained consistently above the Bank of Japan’s target of 2%, with the national core inflation rate accelerating to 3.2% in March. However, a series of U.S. tariff measures are exacerbating the risks to global economic growth, which may pose significant challenges for policymakers led by Governor Kazuo Ueda in advancing the interest rate hike process.
According to informed sources, despite the uncertainties in trade conditions, Bank of Japan officials currently believe there is no need to change their gradual interest rate hike stance.
However, a recent Bloomberg survey shows that observers of the Bank of Japan’s policy expect the interest rate hike to be delayed, and the final interest rate level of this rate hike cycle will also be lower. All 54 economists surveyed expect that the Bank of Japan will not make any policy adjustments at the two-day meeting ending on May 1.
Friday’s report showed that non-fresh food prices rose by 6.4%, with rice prices soaring by 93.8%. The significant increase in rice prices, a staple food in Japan, has drawn widespread public attention. Earlier this month, Japan imported rice from South Korea for the first time since 1999. The issue of food price inflation continues to persist as the U.S. demands greater access to the Japanese agricultural market during trade negotiations
AloJapan.com