Japan's Inflation Accelerates in March, Driven by Rising Rice Prices

Core inflation likely reached 3.2% year-over-year as household price expectations surged, while global trade uncertainties complicate the BOJ's rate hike strategy.

• A Reuters poll estimates Japan's core inflation climbed to 3.2% in March, up from 3% in February, due to rising rice prices and broader cost pressures.
• Household inflation expectations have increased, with 86.7% of surveyed households anticipating price rises within the next year, the highest level since mid-2024.
• The Bank of Japan faces pressure to continue normalizing its monetary policy, with inflation exceeding its 2% target for nearly three years.
• Global trade uncertainties, including U.S. tariffs and heightened tensions with China, complicate the timing of the BOJ's next rate hike, now expected in early 2026 by some analysts.
• Rising living costs are straining household budgets, with reduced spending on leisure activities and mounting political pressure for government intervention to mitigate economic hardships.

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CNA The Japan Times