Japan core inflation slows in April as subsidies ease costs

Japan's key inflation gauge slowed to its weakest pace in four years in April, falling short of market expectations as government subsidies helped ease the cost of living. The core consumer price index, which excludes fresh food, rose 1.4 percent from a year earlier, according to data released Friday by the Internal Affairs Ministry. This marked a deceleration from the 1.8 percent increase recorded in March and was the slowest annual rate of increase since March 2022.

The headline consumer price index also rose 1.4 percent, missing forecasts. A separate index that excludes both fresh food and energy, a measure closely watched by the Bank of Japan as a gauge of demand-driven inflation, rose 1.9 percent, slowing from a 2.4 percent gain the previous month. Officials said the slowdown was largely driven by government subsidies, particularly for school tuition, which lowered costs for private high schools. Price increases for processed food and durable goods also moderated, while energy costs continued to fall, albeit at a slower pace than in March.

The softer-than-expected data presents a complex picture for policymakers. While the figures provide some relief for households after a...