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Japan's Inflation Persists as Rice and Cabbage Prices Soar

March data reveals consumer prices remain elevated, driven by sharp increases in staple food costs, while government interventions and potential BOJ rate hikes dominate economic discussions.

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Japan's government began auctioning its rice stockpile last month
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Overview

  • Japan's core consumer prices rose 3.2% in March compared to the previous year, with inflation surpassing the Bank of Japan's 2% target for nearly three years.
  • Rice prices surged 92.5% year-on-year, while cabbage costs jumped 111.6%, exacerbated by poor harvests, panic-buying, increased tourism, and suspected hoarding.
  • The Japanese government has released 210,000 tonnes of emergency rice reserves and plans to auction an additional 100,000 tonnes to stabilize the market.
  • Market expectations for Bank of Japan interest rate hikes have strengthened, though uncertainties surrounding U.S. trade policies may influence the timing of any action.
  • The rising costs of staple foods have intensified pressure on Prime Minister Shigeru Ishiba's administration to address the economic strain on consumers.