On Friday (May 23), the latest data released by the Japanese Ministry of Internal Affairs and Communications revealed that the year-on-year increase in the core Consumer Price Index (CPI) in April, excluding fresh food, reached 3.5%, hitting a two-year high. This marks the fifth consecutive month that the index has remained above 3%.
The index, based on an average of 100 in 2020, rose to 110.9 in April, an increase of 0.3 percentage points from March. The main drivers behind the rise were increases in energy and food prices, leading to continued pressure on household spending.
As the Japanese government gradually reduces subsidies for electricity and gas, energy prices have surged significantly. Electricity prices increased by 13.5% annually, while urban gas costs rose by 4.7%.
The price increase in food items is even more alarming, with rice prices showing a staggering annual growth rate of 98.4%. This marks a further increase of 6.3 percentage points from the previous month, setting a new historical high for the seventh consecutive month. Related products have also been affected, with rice balls rising by 18.1% and sushi by 5.0%.
To curb the skyrocketing rice prices, the Ministry of Agriculture, Forestry and Fisheries launched a plan in March to release government rice stockpiles into the market. The first wave released approximately 150,000 tons, with an average bidding price of 21,217 Japanese yen (about $148) per 60 kilograms. Officials estimate that by the end of June, private rice stocks will reach 2.09 million tons, higher than the appropriate level, in an effort to alleviate market supply and demand pressures.
Former Minister of Agriculture, Forestry and Fisheries Taku Eto resigned on May 21 after causing a stir and facing political pressure due to a slip of the tongue during a speech where he mentioned, “I have never bought rice before. There is so much rice at home that I can sell it.” On the same day, Prime Minister Shigeru Ishiba appointed Shinjiro Koizumi as the new Minister of Agriculture.
Koizumi stated that his priority is to stabilize rice prices and he plans to evaluate providing government reserve rice directly to supermarkets and restaurants through “flexible contracts.” He aims to reduce retail prices to within 3,000 Japanese yen (about $21) per 5 kilograms by early June. The current average market price is 4,268 Japanese yen (about $30) per 5 kilograms, indicating tight market supply and a situation that has yet to ease.