Reuters poll suggests April core inflation in Japan hit 2-year high

According to a Reuters poll, in April Japan's core inflation rose at the fastest pace in two years. The agency attributes this sharp increase to the reduction of energy subsidies and higher food prices in the country.

The disappointing inflationary dynamics puts the Bank of Japan (BOJ) in a difficult position. On the one hand, the regulator needs to support the weakened economy, which has faced additional pressure from US import tariffs, on the other hand it needs to slow down consumer price growth.

Japan's core inflation rate has been above the central bank's 2% target for three years in a row. Based on the estimates of 19 economists polled by Reuters, in April the rate is set to reach 3.4%, the highest since April 2023. The March reading was at 3.2%.

Facing rising costs, national companies continue to pass them on to consumers. This approach keeps inflation from slowing down in the country which desperately needs to support its GDP growth. Japan's economy showed weak results in the first quarter of the year amid stagnant consumption and falling exports.

Reuters experts anticipate the country's interest rates to remain at the current level until at least September.