BY LEIKA KIHARA
TOKYO — Japan’s core inflation accelerated at its fastest annual pace in more than two years in April on steady rises in food costs, data showed on Friday, raising the odds of another interest rate hike by year-end.
The data underscores the Bank of Japan’s predicament of balancing price pressures from persistent food inflation against growth headwinds from US President Donald Trump’s tariffs.
The core consumer price index (CPI), which excludes fresh food but includes oil prices, rose 3.5 percent in April from a year earlier, exceeding market forecasts for a 3.4 percent gain and accelerating from a 3.2 percent increase in March.
It was also the fastest annual pace of growth for the index since the 4.2 percent rise in January 2023, holding above the central bank’s 2 percent target for more than three years.
“Underlying inflation remained strong in April despite the slashing of public high school fees,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.
“Our own view is that the persistent strength in inflation will convince the (BOJ) to hike interest rates yet again in October,” he said.
A Reuters poll, taken on May 7-13, showed most economists expect the BOJ to hold rates steady through September with a small majority forecasting a hike by year-end. – Reuters
