Core inflation in Japan increased 3.4% year-over-year in April, according to official data on Friday, putting question on the central bank’s projection that inflation will decelerate back below its 2% target later this year as cost pressures abate.
Excluding food and energy, the core consumer price index (CPI) rose 3.4% in April, which was in line with forecasts by economists polled by Reuters and an acceleration from the 3.1% increase seen in March.
Overall inflation also increased in April, from 3.2% in March to 3.5%.
Analysts predict inflation will remain above the Bank of Japan’s 2% target for a longer than expected due to the April rise.
As inflation has remained over target for almost a year, speculation has grown that the BOJ may soon begin winding down its massive stimulus, which has been blamed for warping markets and reducing the profitability of financial institutions.
The Bank of Japan Governor, Kazuo Ueda, has repeatedly emphasized the importance of maintaining an accommodative monetary policy stance until inflation stabilizes at a rate of roughly 2% and wage growth has accelerated.
