Customers look at vegetables and other groceries at a supermarket in Tokyo on June 20, 2025.
Kazuhiro Nogi | AFP | getty images
Core inflation in Japan rose for the first time in five months, rising to 1.8% in March as higher energy prices due to the war with Iran boosted consumer inflation.
Government data showed the inflation figure – which strips out fresh food prices – was in line with the 1.8% expected by economists surveyed by Reuters, and higher than the 1.6% seen in February.
Headline inflation came in at 1.5% compared with 1.3% in February, staying below the central bank’s 2% target for the second consecutive month.
The so-called “core-core” inflation rate, which strips out both food and energy prices, fell to 2.4% from 2.5% in February, its lowest level since October 2024.
Rice inflation, which had made headlines for exceeding 100% in mid-2025, rose 6.8%, its slowest pace since January 2024.
A Bank of Japan survey Data released on Monday showed that more than 83% of respondents expect prices to be higher after a year.
Bank of America analyst Takayasu Kudo said in a note earlier this week that the impact of higher energy prices is likely to be more pronounced in the early summer, pushing up both actual inflation and inflation expectations.
“These developments should strengthen the case for the BOJ to maintain its gradual rate-hike trajectory… We still see a strong likelihood that the BOJ will maintain a bias towards further rate hikes over the medium term.”
According to Citi analysts, the inflation data comes ahead of the BOJ’s meeting on April 27 and 28, where the central bank is expected to keep rates at 0.75%.
Citi said the pause was “likely to be tough” and was due to concerns about further yen depreciation and the risk of falling behind the curve on inflation.
Japan had Narrow escape from technological meltdown In the last quarter of 2025, the country’s economy is projected to grow at a revised 0.3% quarter-on-quarter and 1.3% year-on-year.
On Thursday, Reuters, citing sources familiar with the BOJ’s thinking, said: informed of The central bank was set to cut its growth forecast for the 2026 fiscal year starting in April and also sharply revised down its inflation forecast for the fiscal year.
