Japan's core inflation in April dropped to a four-year low.

Data released on Friday showed that Japan's core consumer prices in April rose by 1.4% year-on-year, hitting a four-year low, mainly due to government subsidies for tuition fees. However, analysts predict that inflation will rise again in the coming months. International oil prices remain high, and the turmoil in the Middle East causing disruptions in the supply chain may lead to a general increase in prices of various goods. The core consumer price index, which excludes the volatile prices of fresh food, saw an increase lower than the market's median estimate of 1.7%, lower than the 1.8% year-on-year increase in March, reaching the lowest level since March 2022. Another core inflation indicator, excluding prices of fresh food and fuel, better reflects changes in prices from the demand side. It is also a key data point monitored by the Bank of Japan, with a 1.9% increase year-on-year in April, lower than the 2.4% increase in March. This data will be an important basis for the Bank of Japan's monetary policy meeting next month, with market expectations that the central bank will raise the short-term policy interest rate from 0.75% to 1%. Influenced by the situation, prices of crude oil and chemical products have risen, with wholesale inflation hitting a three-year high in April. As a leading indicator of consumer prices, this data further supports the possibility of a short-term rate hike.