A customer visits a store at Togoshi Ginza shopping street in Tokyo on January 23, 2025.
Philip Fong | Afp | Getty Images
Japan’s inflation in January climbed to 4%, hitting its highest level since January 2023, further strengthening the case for rate hikes by the central bank.
Core inflation — which excludes prices of fresh food — rose to 3.2% from 3% in the prior month and beat economists’ expectations of 3.1%, according to a Reuters poll. This figure was the highest since June 2023.
The so called “core-core” inflation rate, which strips out prices of both fresh food and energy and is closely monitored by the BOJ, climbed slightly to 2.5% from 2.4% in the month before.
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 rates 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.
The data also comes after the country’s GDP growth beat expectations on a quarter-on-quarter and annualized basis, rising 0.7% and 2.8% respectively.
However, full-year GDP growth for 2024 slowed to 0.1%, a sharp fall from the 1.5% growth seen in 2023.
This is breaking news, please check back for more updates.
