Core Inflation in Japan’s Capital Sharply Accelerates in April

Reuters

10:25 JST, April 25, 2025

TOKYO (Reuters) — Core consumer prices in Japan’s capital rose 3.4% in April from a year earlier, data showed on Friday, accelerating for the second straight month and making the central bank’s task of balancing risks from higher U.S. tariffs and rising prices more challenging.

The increase in the core consumer price index (CPI), which excludes volatile fresh food costs, was faster than a median market forecast of 3.2% and followed a 2.4% gain in March.

The Tokyo core CPI rose above 3% for the first time since July 2023.

The higher reading reflected a reduction in government subsidies to curb electricity and gas bills, as well as a series of price hikes for food that took place on April 1, the start of Japan’s new financial year.

A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the Bank of Japan as a broader price trend indicator, rose 3.1% in April from a year earlier after a 2.2% rise in March.

The Tokyo inflation figures are considered a leading indicator of nationwide trends.

The data comes ahead of the BOJ policy meeting on April 30-May 1, where the central bank is widely expected to keep short-term rates steady at 0.5%.

While BOJ Governor Kazuo Ueda has signaled the central bank’s readiness to keep raising rates, sweeping U.S. tariffs have complicated its decision on when and how far it could hike.

The BOJ will cut its economic growth forecasts and warn of escalating risks from U.S. tariffs, which are expected to dent global demand, sources have said.