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3mo ago

Japan's Inflation Hits 3.5% in April, Pressuring BOJ on Rate Hikes

The fastest inflation pace in over two years intensifies challenges for the Bank of Japan as it weighs further tightening amid economic headwinds.

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Overview

  • Japan's core consumer inflation reached 3.5% in April 2025, the highest annual rate since January 2023, exceeding the BOJ's 2% target for over three years.
  • Core-core inflation, excluding fuel and fresh food, rose to 3.0% in April, up from 2.9% in March, signaling persistent demand-driven price pressures.
  • The BOJ ended its decade-long stimulus program in January 2025 and raised short-term interest rates to 0.5%, but faces pressure to consider additional hikes.
  • Economic challenges, including persistent food inflation and the impact of tariffs imposed by U.S. President Donald Trump, complicate the BOJ's policy decisions.
  • Household burdens remain high due to rising living costs, with modest wage growth failing to keep pace with inflation despite government subsidies and support measures.