The reading comes a few days after data showing Japan's economy grew faster than expected in the first quarter on a post-Covid consumption rebound.
The rise in April, the start of Japan's new business year when many firms tend to modify retail prices, suggests heightening price pressures may keep inflation above the BOJ's 2% target longer than expected, analysts say.
Services inflation accelerated to 1.7% in April from 1.5% in March, the data showed, suggesting that rising labor costs may be starting to feed into broader consumer inflation. "Given stubborn food price pressures, we now expect underlying inflation to peak at 4.5% by mid-year," said Darren Tay, Japan economist at Capital Economics.
With inflation having stayed above its target for a year, markets are simmering with speculation the BOJ will soon phase out its massive stimulus that critics say is distorting markets and hurting financial institutions' profits.
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