Group 1 - Japan's core inflation rose at its fastest pace in over two years in April, with the core consumer price index (CPI) increasing by 3.5% year-on-year, surpassing market expectations of 3.4% and up from 3.2% in March, indicating persistent inflation above the Bank of Japan's 2% target for over three years [1][2] - The inflation rate for food accelerated from 6.2% in March to 7.0% in April, driven by significant price increases in various food items, including a 98.6% rise in rice prices and a 31% increase in chocolate prices [2] - The Bank of Japan is expected to consider another interest rate hike by October, despite market skepticism due to the impact of U.S. trade tensions, with a slight majority of economists predicting a 25 basis point increase by year-end [1][3] Group 2 - A separate inflation index, excluding fuel and fresh food, rose by 3.0% year-on-year in April, up from 2.9% in March, indicating strong underlying demand-driven price pressures [2] - Service sector inflation was more subdued at 1.3% in April, down from 1.4% in March, suggesting companies are slow to pass on rising labor costs [2] - The potential for further increases in consumer prices in May is anticipated as the effects of government measures to curb inflation wane, with ongoing global weather patterns and rice supply shortages likely to keep food prices elevated [2]

Core Viewpoint - Japan's consumer inflation is expected to rise further in May as the effects of government measures to curb inflation diminish [1] Group 1: Inflation Trends - In April, consumer inflation excluding volatile fresh food rose by 3.5% year-on-year, up from 3.2% in March [1] - The economist Takeshi Minami noted that while imported inflation is gradually decreasing, food prices may remain high due to global abnormal weather patterns and ongoing rice supply shortages [1] Group 2: Future Projections - If the excessive weakness of the yen is corrected and rice prices begin to decline, consumer prices may fall below the Bank of Japan's 2% target by early 2026 [1]