Tokyo: Japan's annual core consumer inflation decreased to a two-year low, aligning with the central bank's 2 percent target in January, as reported on Friday. This development indicates weakening price pressures, potentially complicating the Bank of Japan's decision regarding the timing of interest rate hikes.
According to Emirates News Agency, a separate index, considered a more precise gauge of underlying inflation, also showed a slowdown. However, it remained significantly above the Bank of Japan's target, reflecting that substantial wage gains could maintain the central bank's trajectory towards increasing the currently low borrowing costs.
The core consumer price index (CPI), which excludes volatile fresh food costs, saw a year-on-year rise that met the median market forecast, slowing from a 2.4 percent increase in December. An index excluding both fresh food and fuel prices, which the Bank of Japan closely monitors as a more accurate measure of demand-driven inflation, rose by 2.6 percent year-on-year in January.
This increase was lower than the 2.9 percent gain observed in December and was on par with a low recorded in February 2025, as the impact of food price hikes diminished.