Japan Core Inflation Rises 3.5% Amid Food Price Surge

Japan's core inflation surged to 3.5% in April, marking its fastest pace in over two years, driven largely by significant food price increases, especially rice, which nearly doubled in price year-over-year. This persistent inflation, exceeding the Bank of Japan's (BOJ) 2% target for more than three years, has intensified speculation about future rate hikes, though the central bank faces a dilemma due to potential economic impacts from U.S. tariffs. While BOJ Governor Kazuo Ueda has indicated a willingness to raise rates amid strong inflationary trends, recent data and expert analysis suggest a possible pause as the bank assesses tariff effects and expects inflation to ease due to factors like lower oil prices, yen appreciation, and upcoming government subsidies. Economists remain divided, with some predicting rate increases later in the year and others forecasting a stabilization or decline in inflation. The BOJ ended its decade-long stimulus last year and raised rates in January, signaling a cautious approach amid global economic uncertainties. The continued rise in core inflation, especially food costs, underscores the delicate balance the BOJ must maintain between controlling inflation and supporting economic growth.