TOKYO - Japan's core inflation rate dipped below the Bank of Japan's 2% target for the second consecutive month in March. Data released Friday indicated that government fuel subsidies played a key role in offsetting rising energy prices, a consequence of the ongoing Middle East conflict.
Analysts anticipate inflation will rebound above the target in the coming months as companies begin to pass on increased fuel costs.
The core consumer price index, which excludes volatile fresh food prices, rose 1.8% year-on-year in March, matching forecasts and following a 1.6% increase in February.
An alternative index, closely monitored by the Bank of Japan for demand-driven price trends, which excludes both fresh food and fuel, saw a 2.4% rise in March from the previous year, slightly down from 2.5% in February.
This inflation data is expected to be a significant factor for the Bank of Japan at its upcoming policy meeting. While a rate hike is not anticipated, officials are likely to signal preparedness to address rising price pressures.