Japan's core inflation hits more than 2-year high, could force year-end BOJ hike
- BOJ balancing price pressures from persistent food inflation against growth headwinds from U.S. President Donald Trump's tariffs
- April Core CPI(+3.5%), forecast(+3.4%), March Core CPI(+3.2%)
- Fastest annual pace of growth for the index since January 2023(+4.2%)
- The latest uptick in inflation was driven mostly by a food price surge of 7.0% in a sign many companies hiked prices at the April start of Japan's new fiscal year. The price of rice spiked 98.6% last month from a year earlier, while that of chocolate jumped 31%.
- Governor Kazuo Ueda has said the timing for underlying inflation to converge towards the BOJ's target has been pushed back somewhat due to "extremely high" economic uncertainty.
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While the data highlighted sticky price pressure, some analysts expect inflation to slow back near the BOJ's target by year-end as the yen's rally push down import costs.
The hit to growth from U.S. tariffs may also intensify later this year and discourage firms from hiking pay, casting doubt on whether Japan can achieve a wage-driven rise in prices - a key prerequisite for further rate hikes, analysts say.
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Consumption remains stagnant as wage growth fails to catch up with inflation, a key factor that drove Japan's economy into contraction in the first quarter.
참의원선거. 물가. 여당 교체 가능성. JGB 금리 폭등. 채권 자경단.
Big Deficit is expected for BOJ at late May announcement of accounting data. Due to tremendous loss in holding JGB.
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