MNI BRIEF: Japan April Core CPI Rises 3.5% Vs. March 3.2%

Japan's annual core consumer inflation rate accelerated to 3.5% in April from 3.2% in March, driven by rising food prices excluding perishables and energy, data from the Ministry of Internal Affairs and Communications showed Friday.

April marked the 37th consecutive month that core CPI stayed above the Bank of Japan’s 2% target.

Foods excluding perishables led the increase, rising 7.0% y/y, up from 6.2% in March, alongside energy prices, which rose 9.3% from 6.6%. Core-core CPI – which excludes both fresh food and energy and serves as a key underlying inflation measure – increased 3.0% in April, slightly faster than March’s 2.9%.

Services prices, closely watched by BOJ officials to gauge progress in the wage-price cycle, increased 1.3% in April, down from 1.4%, remaining below the 2% mark and suggesting more gains are needed to achieve the Bank’s inflation target sustainably. Officials are paying close attention to how services prices evolve beyond May as corporate price revisions continue.

Processed food prices – sensitive to economic trends and accounting for 15% of the CPI – rose 4.7% in April, up from 4.0% in March. 

While the data supports the BOJ’s gradual tightening path, persistent downside risks to the economy continue to overshadow the likelihood of a near-term rate hike. (See MNI POLICY: Spending Concerns Weigh On BOJ Hikes)