Economy Japan's inflation hits two-year high of 4% in January

[thomas]

Japan's inflation in January increased to 4% year-on-year, reaching its highest level since January 2023 and bolstering arguments for potential rate hikes by the central bank.

Core inflation, which excludes fresh food prices, rose from 3% to 3.2% in January, surpassing economists' expectations of 3.1% and marking the highest reading since June 2023, according to a Reuters poll. Meanwhile, the "core-core" inflation rate—excluding fresh food and energy prices—increased slightly from 2.4% to 2.5%, a key figure monitored by the BOJ.

The headline inflation rate, which had come in at 3.6% in December, has remained above the Bank of Japan's 2% target for 34 straight months. Immediately after the data release, the yen strengthened 0.15% to trade at 149.39 against the dollar. The inflation figures boost the case for rate hikes by the BOJ, which deliberated tightening them at its January meeting, with its summary of opinions warning of inflation risks and weakness in the yen. "It will be necessary for the Bank to adjust the degree of monetary accommodation from the viewpoint of avoiding the yen's depreciation and the overheating of financial activities, both of which appear to be due to excessively high expectations of continued monetary easing," the BOJ summary read.

https://www.cnbc.com/2025/02/21/japans-inflation-rate-climbs-to-4percent-in-january-highest-in-two-years.html