Japan’s CPI Pickup, Rice Price Surge Raise Pressure on Ishiba

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(Bloomberg) — Japan’s key inflation gauge accelerated to the fastest clip in more than two years, with soaring rice prices exacerbating Prime Minister Shigeru Ishiba’s troubles after a cabinet shakeup over controversial comments by his agricultural chief on the nation’s staple food.

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Consumer prices excluding fresh food rose 3.5% from a year earlier in April, quickening from a 3.2% gain in the previous month as food and energy prices pushed up prices further, according to a Ministry of Internal Affairs release on Friday. The cost of rice in particular jumped 98.4%, the most in data going back to 1971.

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Energy prices jumped 9.3% following the March phaseout of government subsidies for gas and electricity. Ruling parties are now weighing a restart of the support as early as June, as well as steps to ease gasoline prices.

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Friday’s data underscore inflationary momentum in Japan, putting pressure on policymakers. It’s especially challenging for Ishiba, just two months ahead of a crucial election test in July. The prime minister’s approval ratings have recently dropped to their lowest level since he took office due largely to simmering dissatisfaction over rising costs of living.

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Ishiba’s administration is drafting an economic stimulus plan to ease the cost-of-living burden on households, with a policy framework expected before the vote. While the Liberal Democratic Party’s junior coalition partner Komeito and opposition parties are urging consumption-tax cuts, Ishiba has pushed back, citing concerns over the fiscal burden.

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“The price hike was particularly noticeable in items like food — essentials that are closely tied to household budgets,” said Kanako Nakamura, an economist at Daiwa Institute of Research. “So when prices for these necessities rise, it can place a significant burden on lower-income households.”

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Food remained a major contributor to price growth, rising 6.5% in April from a year earlier. While the pace slowed slightly from 7.4% in March, prices for some items continued to rise sharply. In particular, the cost of rice increased 98.4% from the previous year, speeding up from March’s 92.1%.

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The spike in prices of the nation’s staple food has stoked widespread public discontent, culminating earlier this week with Agriculture Minister Taku Eto’s resignation after he was criticized for making light of soaring rice costs. Ishiba pledged to bring prices of the grain down below ¥4,000 ($28) per 5 kilograms, highlighting his focus on attempting to ease voter dissatisfaction.

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The number of price increases in food products in April exceeded 4,000 for the first time in 18 months, according to a survey of major food companies by Teikoku Databank.

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The inflation backdrop is also shaping the Bank of Japan’s trajectory. Persistent price growth is bolstering the case for another rate hike, though officials have begun to voice growing concern about global risks, particularly trade uncertainty stemming from US policies.