Japan core inflation accelerates after five months as Iran war stokes energy worries
Customers check out vegetables and other groceries at a supermarket in Tokyo on June 20, 2025.
Kazuhiro Nogi | Afp | Getty Images
Core inflation in Japan accelerated for the first time in five months, rising to 1.8% in March as high energy prices triggered by the war in Iran increased consumer inflation.
Government data showed the inflation figure, which excludes fresh food prices, was in line with the 1.8% expected by economists polled by Reuters and higher than the 1.6% seen in February.
Headline inflation was 1.5%, compared to 1.3% in February, and remained below the central bank’s 2% target for the second consecutive month.
The “core” inflation rate, which excludes both food and energy prices, fell to 2.4% from 2.5% in February, marking its lowest level since October 2024.
Japanese Prime Minister Sanae Takaichi It is considering taking steps to cushion the economic blow from rising fuel costs, including lowering gas prices. Tokyo also released crude oil from its stockpiles to ease the oil shock.
Takaichi said he plans to cap pump prices nationwide in March to an average of 170 yen ($1.07) per liter, and gasoline prices could potentially reach 200 yen per liter.
A. Bank of Japan survey The survey, released Monday, showed that more than 83% of respondents expect prices to be higher a year from now.
Bank of America analyst Takayasu Kudo said in his note earlier this week that the effects of high energy prices will become more evident starting from the summer, which will increase both real inflation and inflation expectations.
“These developments should reinforce the idea that the BOJ will continue its gradual interest rate hike trajectory… We see a strong possibility that the BOJ will continue its trend towards further interest rate hikes in the medium term.”
The inflation figures come ahead of the BOJ meeting on April 27 and 28, when the central bank is expected to keep interest rates at 0.75%, according to Citi analysts.
Citi said this stance was “most likely hawkish”, adding that it was driven by concerns about the risk of further depreciation of the yen and falling behind the inflation curve.
there was japan Tech narrowly avoids recession In the last quarter of 2025, the country’s economy experienced growth of 0.3% compared to the previous quarter and a revised 1.3% annual rate.
Reuters on Thursday quoted sources familiar with the BOJ’s thinking as saying: reported The central bank was prepared to cut its growth forecast for fiscal 2026, which starts in April, and sharply revise its inflation forecast for the fiscal year upwards.
Rice inflation, which made headlines by exceeding 100% in mid-2025, rose 6.8%, its slowest pace since January 2024.
10-year benchmark return Japanese government bonds increased by approximately 2 basis points to 2.447%.
