Japan Core Inflation Hits Four-Year Low as War Rebound Looms

Japan’s core CPI eased to a four-year low of 1.4% y/y in April, yet surging wholesale prices signal a war-driven rebound ahead. The soft print follows a strong Q1 GDP beat of 2.1% annualized and 0.5% quarter-on-quarter that lifted the Nikkei 225 to a record 63,799 and prompted markets to price a higher chance of a Bank of Japan rate hike. April exports also accelerated on a 7.8% yen depreciation, but rising oil prices tied to Middle East tensions now threaten to squeeze profits and complicate the central bank’s June policy decision.