Japan’s inflation rises in March and adds pressure on BOJ

Japan’s core consumer price index, which includes oil products but excludes fresh food prices, rose 3.2%, in line with expectations, but jumped from a 3% previous month.

The latest acceleration was driven mainly by continuous rise in food prices and further complicates the Japanese central bank’s situation ahead of next policy meeting (due on May 1) when BoJ is expected to keep interest rates on hold and to downgrade growth outlook on growing concerns about the increased pressure on the economy from higher US import tariffs.

Core inflation remained above central bank’s 2% target every month for three years in a row, as rising raw material and labor costs continued to fuel inflationary pressures, along with surge in prices of gasoline, food and services that continues to boost pressure on households and industry.

Economists expect prices to remain elevated for some time, particularly food prices, but BoJ’s main task will be to handle the strong hit that the economy will face from US tariffs, with next rate hike to be expected in June or later.