Tokyo, May 23, 2025 -Japanese inflation spiked at a two-year high in April, data showed Friday, as rice prices almost doubled, turning focus on the central bank as it mulls more interest rate hikes amid Donald Trump’s trade war.The news also puts pressure on Prime Minister Shigeru Ishiba ahead of elections in July and after a minister was forced to resign over a gaffe about the national food staple while officials were forced to dip into emergency stockpiles.Core inflation excluding fresh food hit 3.5 percent last month, the internal affairs ministry said, its highest since January 2023 and well up from the 3.2 percent in March.Rice prices soared an eye-watering 98.4 percent year-on-year, slightly more than the previous month’s increase.The rocketing cost of a key part of Japanese people’s diet is growing into a crisis for the government, which was already struggling to win popularity having lost its parliamentary majority in an election last year.Factors behind the shortfall include poor harvests due to hot weather in 2023 and panic-buying prompted by a “megaquake” warning last year.Record numbers of tourists have also been blamed for a rise in consumption while some traders are believed to be hoarding the grain.The government began auctioning its stockpile last month for the first time since it was started in 1995.Excluding energy and fresh food, the consumer price index rose 3.0 percent, from to 2.9 percent in March, Friday’s data showed, while the overall unadjusted figure was unchanged at 3.6 percent. Underlying inflation has been above the BoJ’s target rate of two percent for around three years and while the central bank began lifting interest rates last year it has paused them recently as it assesses the impact of Trump’s tariffs.With Japanese officials heading to Washington for more talks on slashing the US president’s tariffs, the Bank of Japan is holding off any more increases for now.The BoJ warned at its last meeting this month that tariffs were fuelling global economic uncertainty and revised down its economic growth forecasts for the country.“Consumer price inflation will slow very gradually,” said Stefan Angrick at Moody’s Analytics.“US tariffs and tariff threats will dampen growth in Japan and globally, further weighing down demand-driven price pressures. The Bank of Japan isn’t done hiking, but it’s not moving just yet. Tariff haze will keep the central bank on hold for the time being. “We expect another rate hike in early 2026.”Adding to the problems for Ishiba, his farm minister resigned this week after controversial comments that caused public fury.Taku Eto told a gathering over the weekend that he had “never bought rice myself because my supporters donate so much to me that I can practically sell it”.After Eto’s resignation, the prime minister said: “I apologise to Japanese people” as “it is my responsibility that I appointed him”.“That rice prices are remaining high is not a one-time phenomenon but is a structural one, I think. We have to have thorough discussions on this and they (rice prices) have to fall, of course,” he said.Marcel Thieliant at Capital Economics said that “weekly rice prices are showing signs of stabilisation so rice inflation should start to soften again before long”.
