Japan's core inflation hits more than 2-year high, keeps BOJ under pressure

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TOKYO : Japan's core consumer inflation hit 3.5 per cent in April to advance at its fastest annual pace in more than two years, data showed on Friday, maintaining pressure on the central bank to continue raising interest rates.

The data underscores the Bank of Japan's predicament of balancing price pressures from persistent food inflation against growth headwinds from U.S. President Donald Trump's tariffs.

The year-on-year increase in core consumer price index (CPI), which includes oil products but excludes fresh food prices, compared with a median market forecast for a 3.4 per cent gain and followed a 3.2 per cent gain in March.

The index thus rose at the fastest annual pace since the 4.2 per cent hit in January 2023, holding above the central bank's 2 per cent target for more than three years.

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Another index, discounting the impact of both fuel and fresh food and closely monitored by the BOJ as a better gauge of demand-driven price pressure, rose 3.0 per cent in April from a year earlier, the data showed. It accelerated from a 2.9 per cent gain in March.

The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term interest rates to 0.5 per cent.

While it has signalled readiness to raise rates further, the economic repercussions from Trump's tariffs have complicated decisions around the timing of the next rate increase.

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