FX.co ★ Tokyo Core Inflation Jumps to 3.4% in April, Highest in Two Years

In April 2025, the core consumer price index for Tokyo's Ku-area saw a 3.4% year-on-year increase, rising from a 2.4% uptick in March and reaching its peak in the past two years. This figure also exceeded market expectations, which had predicted a 3.2% rise. This marks the sixth consecutive month where core inflation has met or surpassed the Bank of Japan's 2% target, bolstering the likelihood of the central bank gradually moving towards normalizing monetary policy in 2025. Despite the inflationary pressures, the Bank of Japan is broadly expected to maintain its policy rate at 0.5% during next week's meeting. Policymakers are acting with caution due to the uncertain economic repercussions following the imposition of new U.S. tariffs. Reports indicate that the U.S. has clarified to Japan's trade representatives that Tokyo will not secure any exemptions under the current tariff structure, despite Japan's efforts to negotiate otherwise. Tokyo’s inflation statistics are scrutinized closely as they often serve as a preliminary gauge of nation-wide pricing trends.