Japan inflation steady at 3.6%, core CPI at over two-year high

Japan's annual inflation rate stood at 3.6% in April 2025, unchanged from March while remaining at its lowest level since December 2024. This stability in headline inflation reflects a complex mix of easing price pressures in some sectors and rising costs in others.

Japan inflation steady at 3.6%, core CPI at over two-year high

Food prices increased at the slowest pace in four months, up 6.5% year-on-year compared to 7.4% in March, despite a staggering 94.8% surge in rice prices—marking the seventh consecutive month of record highs. The sharp rise in rice costs was driven by persistent supply constraints due to poor harvests and surging demand from an influx of foreign tourists. Price growth also moderated for several consumer categories, including clothing (2.7% vs 3.0%) and household goods (4.1% vs 4.5%). A significant deflationary trend was observed in education, where prices plunged 5.6% year-on-year, deepening from a 1.2% decline in March. This drop may be tied to policy adjustments or demographic changes impacting school enrollments.

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Conversely, inflation remained steady in the transport sector (2.7%), and picked up in housing (1.0% vs 0.8%), healthcare (2.2% vs 2.0%), recreation (2.7% vs 2.0%), communications (1.1% vs 1.0%), and miscellaneous goods and services (1.3% vs 1.1%). Energy costs saw the most notable increases, with electricity prices jumping 13.5% (up from 8.7%) and gas prices climbing 4.4% (from 2.4%), as the effects of earlier government subsidies continued to wane. Core inflation—which excludes volatile items such as fresh food—accelerated to 3.5% in April, the highest rate in over two years, up from 3.2% in the previous month. On a monthly basis, the Consumer Price Index (CPI) edged up by 0.1%, a deceleration from March’s 0.3% increase, indicating a possible short-term easing in inflation momentum despite underlying pressures.