MNI BRIEF: Japan Apr Core CPI Rises 3.4% Vs Mar 3.1%

Japan's annual y/y core CPI rose 3.4% in April – accelerating from March's 3.1% – beating Bank of Japan expectations, Ministry of Internal Affairs and Communications data released Friday showed.

Higher food prices, excluding fresh food, and lower energy price drove the latest print, which will increase pressure on the BOJ to revise up the median forecast for core CPI this fiscal year from 1.8% made in April. The strong price view may prompt the BOJ to change its forecast that the y/y rise in core CPI will fall below 2% toward the middle of fiscal 2023.

The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) rose 4.1% y/y in April, also accelerating from March's 3.8%, due to pass-through of cost increases, which includes typical April price revisions.

The negative contribution from energy on CPI widened to -0.37pp in April from a 0.32pp decline in March. Prices excluding perishables rose 9% y/y in April compared to 8.2% in March, while its positive contribution increased 2.02pp from 1.85pp. Prices for processed foods, which accounts for 15% of CPI and is an important input for BOJ officials, rose 9.3% from 8.3%, indicating pass-through of cost increases continued.