The pace of Japan’s consumer inflation was a little stronger than expected even as the resumption of government energy subsidies slowed price gains, backing the case for the Bank of Japan to stay on a gradual rate hike path.
Japanese inflation slowed to 3.7% from 4%, a smaller decrease than the expected 2.9%. This, along with sustained core inflation above the BOJ's 2% target, supports the Bank of Japan's gradual rate hike strategy. Government energy subsidies partially offset inflation, while rising food costs added to it. The BOJ held policy steady, assessing earlier hikes and global trade changes, with a potential rate increase expected in June or July.