Japan has been jolted by a dramatic spike in rice prices, which surged by 101.7% year-on-year in May 2025 – the most significant increase in over fifty years.
This sharp rise in the cost of the country’s staple food has contributed heavily to Japan’s inflation, which jumped to 3.7%, marking its highest point since January 2023.
The Bank of Japan (BOJ) now faces mounting pressure, as this marks the 38th consecutive month inflation has surpassed the Bank’s 2% target.
Notably, the ‘core-core’ inflation rate, excluding fresh food and energy rose to 3.30%, an indication that broader cost pressures are sticking.
The government has begun releasing emergency rice stockpiles in an attempt to dampen prices, but analysts remain cautious.
With rice accounting for nearly half of Japan’s core inflation, its influence stretches well beyond supermarket aisles. A continued rise could affect everything from packaged goods to restaurant prices.
Despite calls for tightening policy, the BOJ has opted to keep interest rates at 0.5%, citing expectations of inflation easing in the coming months.
However, with geopolitical tensions and supply chain factors still looming, the outlook remains uncertain.