Japan’s underlying inflation slowed sharply in April, creating increasingly difficult conditions for the Bank of Japan to justify near-term rate hikes despite recent hawkish rhetoric from several policymakers.
CPI core, excluding fresh food, eased from 1.8% yoy to 1.4% yoy, well below expectations of 1.7% yoy and marking the slowest pace since March 2022. Headline CPI also edged lower from 1.5% yoy to 1.4% yoy, remaining below the BoJ’s 2% target for a fourth consecutive month.
The details of the report reinforced signs that domestic inflation momentum is weakening rather than broadening. CPI core-core, which excludes both fresh food and energy, slowed from 2.4% yoy to 1.9% yoy, while service-sector inflation moderated to just 0.9%. A sharp -10.6% drop in education fees weighed heavily on services prices and offset continued increases across other categories.
The report also highlighted how some of the extreme price pressures seen last year have faded, with rice prices rising just 0.6% yoy compared with a massive 98.4% surge in April 2025. Energy prices fell -3.9% yoy in April following a -5.7% decline in March due to the government measures.
| Indicator | Previous | Latest |
|---|---|---|
| Headline CPI (yoy) | 1.5% | 1.4% |
| CPI Core ex-Fresh Food (yoy) | 1.8% | 1.4% |
| CPI Core-Core ex-Fresh Food & Energy (yoy) | 2.4% | 1.9% |
| Service Inflation (yoy) | — | 0.9% |
| Energy Prices (yoy) | -5.7% | -3.9% |
| Rice Prices (yoy) | — | 0.6% |
