Japan's core inflation rate decreased to 1.8% in March, falling below the Bank of Japan's target of 2% for the second consecutive month. This decline is attributed to government fuel subsidies and a decrease in food prices. However, analysts predict inflation may rise again as companies begin to transfer increased fuel costs to consumers, particularly due to disruptions caused by the ongoing conflict in Iran. The Bank of Japan is expected to keep interest rates unchanged at its next policy meeting while remaining cautious about future hikes. Meanwhile, underlying inflation, which excludes fresh food and fuel, rose by 2.4% in March, indicating persistent demand-driven price pressures. The geopolitical situation has complicated Japan's economic landscape, with rising crude oil prices and a stronger U.S. dollar increasing import costs. Additionally, wholesale inflation has risen as businesses adjust to higher raw material costs, with service-sector prices climbing 3.1% year-on-year. The Bank of Japan faces a challenging balancing act between controlling inflation and supporting an economy susceptible to external shocks.