The CPI increase still shows a slowdown compared to the 2.6% year-on-year increase in March and 2.8% in February, according to the report prepared by the Statistics Bureau of the Japanese Ministry of Internal Affairs and Communications.

Food prices, excluding fresh food due to high volatility, rose 4.3% year-on-year, up 0.5 percentage points from March.

The biggest increases were in the cost of fresh vegetables (13.5%), fruit (13.5%) and vegetables and seaweed (10.6%).

Prices for leisure and entertainment activities also rose in April, up an average of 6.2% year-on-year, with a 7.7% increase for services linked to this industry.

Energy costs fell by 1.1%, with electricity (down 1.1%) and gas (down 4.2%) falling, although the prices of other fuels, including motor fuels, rose by 4%.

The Japanese currency was trading today in a range near 157 yen to the dollar, after falling to 160 yen in late April, for the first time in 34 years.

A weak yen tends to inflate exporters' overseas remittances, but it also increases the cost of imports of energy and raw materials, on which Japan depends.

The governor of the Bank of Japan, Kazuo Ueda, said on May 8 that he may consider a change in monetary policy, with a new interest rate hike, if the recent depreciation of the yen causes inflation to accelerate.

The Bank of Japan raised its benchmark short-term interest rate in March to 0.1%, the first increase in 17 years, but still a long way from rates in other major world economies.

Inflation in Japan has been above the Bank of Japan's 2% target for more than two years, initially due to rising energy costs resulting from the war in Ukraine, and currently due to rising food prices.

Persistent inflation and weak wage growth led consumption, which accounts for nearly 60% of Japan's gross domestic product (GDP), to contract by 0.7% in quarterly terms in the first three months of 2024.

Japan's economy shrank by 0.5%, compared to the last quarter of last year.

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