Japan core inflation accelerates, rice prices soar 98 pc
TOKYO: Japan's core inflation rate accelerated in April to 3.5% as rice prices almost doubled year-on-year, official data showed on Friday.
The consumer price reading excluding fresh food—up from 3.2% the previous month—was slightly above market forecasts and will likely cement expectations that the Bank of Japan will increase interest rates.
Excluding energy, prices rose 3.0% compared to 2.9% in March, according to the Internal Affairs Ministry.
Overall unadjusted inflation stood at 3.6%, the same level as in March.
Underlying inflation has been above the BoJ's target rate of 2% for around three years. However, uncertainty arising from US President Donald Trump's trade policies could prompt the central bank to maintain its current stance for now.
At its last meeting in early May, the BoJ kept its main interest rate steady but warned that tariffs were fuelling global economic uncertainty and revised down its economic growth forecasts for Japan.
Rice
After several decades of stagnant or falling prices, inflation returned to Japan in the wake of the Russian invasion of Ukraine in 2022. This development has become a political headache for the government, particularly with regard to the cherished national staple, rice.
Official data released on Friday showed that rice prices were up a whopping 98.4% compared to April 2024, following a 92.5% rise in March. The price increase has prompted the Japanese government to release some of its emergency stockpile into the market.
Factors behind the shortfall include poor harvests due to hot weather in 2023 and panic-buying triggered by a "megaquake" warning last year. Record numbers of tourists have also been blamed for a rise in consumption, while some traders are believed to be hoarding the grain.
This week, Japan's farm minister resigned after a gaffe about rice drew public fury. Taku Eto told a gathering over the weekend that he had "never bought rice myself because my supporters donate so much to me that I can practically sell it". After Eto's resignation, Prime Minister Shigeru Ishiba said: "I apologise to Japanese people" as "it is my responsibility that I appointed him".
"That rice prices are remaining high is not a one-time phenomenon but is a structural one, I think. We have to have thorough discussions on this and they (rice prices) have to fall, of course," he added.
Marcel Thieliant at Capital Economics said that "weekly rice prices are showing signs of stabilisation so rice inflation should start to soften again before long". He added that he expects the BoJ "to tighten policy further this year".
By RSS/AFP
