Tokyo-area Inflation Acceleration Suggests Arrival of Sustainable Inflation, Nikkei Jumps Weekly 3%

Akira Ito
25 Apr, 2025
Tokyo

Stock market indexes in Tokyo advanced for the third consecutive session and extended their weekly rise, tracking gains in overnight trading on Wall Street. 

The Nikkei 225 Stock Average jumped nearly 2%, and the broader Topix index advanced 1.4%. 

Investors bid up stocks in Tokyo following gains on Wall Street in hopes that the U.S. Federal Reserve may consider a rate cut at the next policy meeting if the economic growth weakens and the job market is hurt after the introduction of stiff tariffs. 

Fed Governor Christopher Wallace and Cleveland Fed President Beth Hammack separately commented in support of the possible rate cut at the end of the policy meeting in June. 

Closer to home, the Tokyo area's core inflation rate accelerated to 3.4% from 2.4% in March. according to a report released by the Statistics Bureau of Japan. 

The overall inflation accelerated to an annual pace of 3.5% from 2.9% in the previous month, amid broad-based inflation and a surge in services prices. 

Market participants were anticipating inflation to accelerate after the lowering of government subsidies for energy and electric utilities, along with a wave of price increases on more than 2,300 food items on April 1. 

Businesses generally reset prices at the start of the new financial year, and the latest price increases were higher than expected, indicating that businesses are finally prepared to pass on higher input costs to consumers. 

With the solid wage increases for the third consecutive year, the sustainable inflation expected by the Bank of Japan is finally getting entrenched in the economy. 

Despite the latest uptick in inflation, the Bank of Japan is expected to keep its short-term interest rate unchanged at 0.5%, amid deteriorating trade terms with the U.S. and slowing economic activities in China. 

The yen edged lower to 143.78 against the U.S. dollar after the release of inflation data. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average gained 1.8% to 35,677.98, and the broader Topix index advanced 1.4% to 2,628.41.

Tech stocks led the broader market higher for the third consecutive day in a row. 

Tokyo Electron Ltd. increased 3.3% to ¥21,060.0, Advantest Corp. jumped 4.3% to ¥5,986.0, and Disco Corp. jumped 3.2% to ¥28,460.0. 

Mitsubishi UFJ Financial Group added 0.5% to ¥1,729.50, Sumitomo Mitsui Financial Group advanced 0.8% to ¥3,282.0, and Mizuho Financial Group added 0.7% to ¥3,477.0. 

Marubeni Corp. rose 1.3% to ¥2,496.0, Itochu Corp. advanced 1.3% to ¥7,136.0, Mitsubishi Corp. added 0.5% to ¥7,136.0, Sumitomo Corp. increased 1.3% to ¥3,454.0, and Mitsui & Company edged up 1.5% to ¥2,833.0.