Japan’s inflation falls to 2% in January, aligning with the central bank’s target

Posted on March 4, 2024   |  

Japan's core consumer inflation eased for the 3rd consecutive month in January but remained above forecasts, aligning with the central bank's 2% target.

Despite a slowdown to a 2.0% increase, January's core consumer prices index (CPI) surpassed market predictions, signaling potential hefty pay raises in upcoming wage talks.

Anticipation for the Bank of Japan (BOJ) to end negative interest rates in March or April is fueled by expectations of significant pay hikes during labor-management negotiations on March 13.

The core consumer price index in Japan, which excludes fresh food prices but includes oil products, experienced a deceleration.

Energy cost reductions, including government subsidies to curb gasoline and utility bills, contributed to the easing of inflation.

This decline in cost-push pressure suggests a departure from the sustained core inflation observed since April 2022, remaining at or above the BOJ's 2% target.