TOKYO - Japan's annual core consumer inflation registered 2.0 percent in January, the slowest rate in two years. This deceleration in cost-push pressure complicates the Bank of Japan's timeline for raising interest rates.
The core consumer price index, excluding volatile fresh food, met market forecasts, slowing from 2.4 percent in December. This aligns with the Bank of Japan's expectation that inflation would briefly dip below its 2 percent target due to last year's base effects.
A closely watched index, stripping away both food and fuel costs to better gauge demand-driven inflation, rose 2.6 percent in January, down from 2.9 percent in December. This marks the slowest annual increase since February 2025.
The Bank of Japan concluded its decade-long stimulus program in 2024 and has implemented several rate hikes, believing Japan is on track to achieve its 2 percent inflation target sustainably. Economists surveyed by Reuters anticipate the central bank will raise its key interest rate from 0.75 percent to 1 percent by the end of June.