Tokyo, Japan — Core inflation in Japan surged to 3.5% in April, driven by a notable increase in rice prices, according to recent government reports. This figure exceeded economists’ forecasts of 3.4% and marks the highest inflation rate since January 2023.

Headline inflation remained steady at 3.6% year-over-year, continuing a trend that has seen it persist above the Bank of Japan’s target of 2% for over three years. The consistency of these numbers has prompted speculation regarding potential adjustments in monetary policy, particularly as the central bank evaluates the impact of U.S. tariffs.

Bank of Japan Governor Kazuo Ueda expressed a cautious outlook, emphasizing the dual need to consider both rising prices and the external pressures from international trade policies. Recently, Japan has faced an acute spike in rice prices, which has been particularly pronounced in supermarkets across the country. The cost of a 5-kilogram bag of rice experienced a notable jump, increasing by 54 yen to 4,268 yen (approximately $29.63) as of May 11.

Economists predict that core inflation may begin to moderate in the months ahead, fueled by decreasing crude oil prices and an appreciation of the yen. Masato Koike, an economist at Sompo Institute Plus, indicated that historical patterns observed during prior U.S. administrations suggest a possible decrease in food prices due to an oversupply impacted by tariffs.

Additionally, the upcoming resumption of government subsidies for household electricity and gas bills may contribute further to easing inflationary pressures. On the foreign exchange front, the Japanese yen strengthened slightly against the U.S. dollar, trading at 143.80, following the release of the inflation data.

As policymakers navigate these complex dynamics, the ongoing adjustments in the global economic landscape will undoubtedly shape Japan’s financial future. Observers remain keenly attuned to how these inflationary trends will influence both consumer behavior and economic strategy in the coming months.