The annual pace of Japan’s core Consumer Price Index (CPI) showed some moderation, dipping to 3.0% in February, yet still staying above the Bank of Japan’s (BoJ) steadfast 2% target. Since April 2022, this benchmark has consistently exceeded expectations.
The Ministry of Internal Affairs highlighted that government subsidies aimed at alleviating electricity and gas expenses played a critical role in tempering inflation. February’s core CPI incrementally surpassed market predictions of 2.9%, though not by a considerable margin. Still, it was lower than January’s figure of 3.2%.
Japan’s households grapple with escalating costs of essential items, including petrol, food, and lodging, placing a strain on family budgets. When factoring in the typically volatile prices of fresh food, February’s inflation reached 3.7% annually. This metric stands among the highest within the Group of Seven economies and was beyond the market forecast of 3.5%. However, it marked a reduction from January’s 4.0%.
In a decision that underscores caution amidst global economic headwinds, particularly those tied to trade tensions initiated under former U.S. President Donald Trump’s administration, the BoJ opted against altering its interest rates on Wednesday by keeping the benchmark at 0.50%.
BoJ Governor Kazuo Ueda acknowledged the negative impact of escalating prices on the general populace, stating, rising food costs, notably in essentials like rice, could influence inflation dynamics by reshaping household expectations and perceptions of future price trends.
