Investing.com-- Japanese consumer price index inflation grew more than expected in April after a bumper springtime wage hike helped boost private spending and offset headwinds from higher U.S. trade tariffs.
National core CPI, which excludes volatile fresh food prices, grew 3.5% year-on-year in April against expectations of 3.4%, government data showed on Friday. The print also increased from the 3.2% seen in the prior month and was at its highest level since early-2023.
A core CPI reading that excludes both fresh food and energy prices, and is closely watched as a gauge of underlying inflation by the Bank of Japan, edged up to 3% from 2.9% in the prior month, pulling further above the BOJ’s 2% annual target.
National headline CPI remained steady at 3.6% in April.
Friday’s strong CPI reading was driven chiefly by strong private spending, after Japanese labor unions won another round of bumper springtime wage hikes earlier this year.
The print also ties into the BOJ’s expectations that higher wages will boost prices, which could in turn spur the central bank into hiking interest rates further in the coming months.
While the BOJ had tempered its rate hike outlook due to uncertainty over increased U.S. trade tariffs, a sustained uptick in inflation could push the bank into raising rates further.
The BOJ ended nearly a decade of ultra-loose monetary policy last year, and had raised interest rates twice. The central bank had also hiked rates by 25 basis points in early-2025, but has since struck a more cautious stance on further monetary tightening.