JPY: One-off effect lifts inflation – Commerzbank

The inflation rate for the Tokyo area rose to 3.5% in April, once again exceeding the expectations of analysts surveyed by Bloomberg. Rice prices rose sharply again in April, Commerzbank's FX analyst Volkmar Baur notes.

Tokyo inflation hits 3.5%, beats forecasts

"They are now 94% higher than in the same month last year. This time, however, they were not the main cause of the renewed rise. In April last year, school fees in Japan were significantly reduced, which had a one-off effect of pushing down inflation. This effect has now disappeared from the data, pushing the annual rate back up. As a result, the core rate, which excludes energy and food, also rose from 1.1% in March to 2.0%."

"The inflation picture therefore looks somewhat better for the Bank of Japan, which will meet next week on 1 May to make its next monetary policy decision. However, uncertainties remain high at the moment. US tariffs were raised sharply at the beginning of April, and it is not yet possible to assess their full economic impact. Therefore, I still believe that it will be too early for the Bank of Japan to raise interest rates again next week and that the next rate hike is more likely in July."