January Consumer Prices in Japan Rise 2%... Lowest Since March 2022

January CPI Increase Slows for 3 Consecutive Months
Bank of Japan Expands Monetary Policy Variables

Japan's Consumer Price Index (CPI) increase in January slowed for the third consecutive month. As inflationary pressures ease, this adds a new variable to the Bank of Japan's (BOJ) monetary policy, which has been considering raising the benchmark interest rate.

According to Japan's Ministry of Internal Affairs and Communications on the 27th, the January CPI excluding volatile fresh food was 106.4, up 2.0% year-on-year. This marks the third consecutive month of slowdown and is the lowest level since March 2022, when it was 0.8%. The market forecast estimated by financial information service provider QUICK was 1.8%.

The January core CPI, which excludes fresh food and energy, rose 3.5% year-on-year, showing a slower increase compared to the previous month (3.7%). The core CPI, a key factor in BOJ's monetary policy decisions, recorded its lowest level in 11 months. During the same period, the comprehensive index including fresh food and energy rose 2.2%.

Accordingly, Investing.com analyzed that the pressure on the BOJ to end its long-standing negative interest rate policy and shift to tightening has somewhat eased. The market expects the BOJ to keep rates unchanged at its March meeting and possibly raise them as early as April. ING commented, "Today's data increases the likelihood of a rate hike in April."