April’s 1.4% core inflation reading marks Japan’s slowest pace in four years, driven by government subsidies, but war-related energy costs may reverse the trend.
Japan’s core consumer price index rose 1.4% year-on-year in April, the slowest increase since March 2022. The decline was attributed to government subsidies on school tuition, which softened price pressures.
The reading fell short of the 1.7% market forecast and the prior month’s 1.8% gain. Core-core inflation, excluding fresh food and energy, slowed to 1.9% from 2.4% in March, the lowest since July 2024.
Analysts expect inflation to rebound as Iran war-related energy costs and supply disruptions feed into consumer prices. The Bank of Japan is likely to consider the April data ahead of its June policy meeting, where a rate hike to 1% is anticipated.