Japan’s April inflation slows further to 2.2%, matching forecasts

Japan’s April inflation slows further to 2.2%, matching forecasts
Japan’s April inflation slows further to 2.2%, matching forecasts

Japan’s core inflation slowed for a second straight month in April due to weaker food inflation, while remaining comfortably above the central bank’s 2% target, data showed. government on Friday.

The core consumer price index (CPI), which excludes fresh food, rose 2.2% from a year earlier, after rising 2.6% in March. This increase corresponds to the median market forecast.

The core index, which excludes both fresh food and energy costs and is closely monitored by the Bank of Japan as a key indicator of general inflation trends, rose by 2.4% after increasing by 2.9% in March.

Inflation data is seen as key to subsequent rate hike decisions by the Bank of Japan (BOJ), which wants to raise interest rates, albeit gradually, after ending negative rates in March, as part of a historic change from the ultra-light monetary policy it had been pursuing for ten years.

The BOJ said a virtuous cycle of sustainable and stable achievement of its 2% price target and strong wage growth was key to normalizing policy.

Growing bets on further policy tightening from the BOJ this year sent the yield on 10-year Japanese government bonds to 1% briefly this week, a level not seen since early May 2013. of the unprecedented experiment in policy easing carried out by former BOJ Governor Haruhiko Kuroda.

Speculation has been fueled in part by the yen’s continued weakness, which markets fear could force the BOJ to bring forward the next interest rate hike to soften its impact on the cost of living.

The weakening of the yen, while pushing up import prices, threatens to exacerbate the purchasing power of households and weigh on consumption. (Reporting by Makiko Yamazaki and Satoshi Sugiyama, editing by Chang-Ran Kim)

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