Japan’s Core Inflation Climbs to Five-Month High

(MENAFN) Japan's core inflation climbed at its fastest pace in five months in March, propelled by mounting energy price anxiety stemming from the Iran war, government data revealed Friday.

Core consumer prices — stripping out fresh food — advanced 1.8% year-on-year last month, accelerating from 1.6% in February and surpassing analyst forecasts of 1.7%.

Headline inflation similarly picked up, rising to 1.5% from 1.3% the previous month, though it remained beneath the Bank of Japan's 2% target for a second straight month.

The so-called "core-core" index, which filters out both fresh food and energy, edged down to 2.4% from 2.5% — its weakest reading since October 2024 — signaling that underlying domestic price pressures may be gradually cooling.

The release arrives as Prime Minister Sanae Takaichi's administration weighs an expanded package of household relief measures, with particular focus on reining in gasoline costs. Tokyo has already begun tapping its crude stockpiles to soften the blow of the oil shock, and fuel subsidies have been operational since March.

Takaichi has publicly committed to capping average pump prices at approximately 170 yen — around $1.07 per liter — nationwide, cautioning that without intervention, prices could surge toward $1.25 per liter, according to media.

Finance Minister Satsuki Katayama indicated the fiscal weight of sustaining that buffer: maintaining gasoline prices near $1.05 — down from roughly $1.25 — could drain approximately $1.87 billion from government coffers every month.

Despite the energy market turbulence, actual energy costs fell 5.7% in March, cushioned by state support mechanisms including the removal of the provisional gasoline tax.

The inflation figures land just days before the Bank of Japan's scheduled policy meeting on April 27–28, where policymakers are widely expected to hold interest rates steady at 0.75%.

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