Japan Core Inflation Hits 14-Month Low

2026-01-22 23:48 By Jam Kaimo Samonte 1 min. read

Japan’s core consumer price index, which excludes fresh food but includes energy, rose 2.4% year on year in December 2025, easing from 3% in November and marking the weakest pace since October 2024.

The reading was in line with market expectations and comes ahead of the Bank of Japan’s upcoming policy decision, where policymakers are widely expected to keep interest rates unchanged after December’s hike.

Even so, markets continue to price in another rate increase later this year, potentially as early as June.

BOJ Governor Kazuo Ueda has repeatedly stated that the central bank remains prepared to tighten policy further if economic activity and inflation evolve in line with its projections.

However, the outlook has become more complex after Prime Minister Sanae Takaichi called a snap election to consolidate power and advance expansionary fiscal measures, including a proposal to cut the 8% sales tax on food, which has heightened concerns about Japan’s fiscal trajectory.



News Stream
Japan Core Inflation Hits 14-Month Low
Japan’s core consumer price index, which excludes fresh food but includes energy, rose 2.4% year on year in December 2025, easing from 3% in November and marking the weakest pace since October 2024. The reading was in line with market expectations and comes ahead of the Bank of Japan’s upcoming policy decision, where policymakers are widely expected to keep interest rates unchanged after December’s hike. Even so, markets continue to price in another rate increase later this year, potentially as early as June. BOJ Governor Kazuo Ueda has repeatedly stated that the central bank remains prepared to tighten policy further if economic activity and inflation evolve in line with its projections. However, the outlook has become more complex after Prime Minister Sanae Takaichi called a snap election to consolidate power and advance expansionary fiscal measures, including a proposal to cut the 8% sales tax on food, which has heightened concerns about Japan’s fiscal trajectory.
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Japan’s core consumer price index, which excludes fresh food but includes energy, rose 3% YoY in October 2025, the highest in three months and in line with expectations. The reading accelerated for a second straight month after 2.7% in August and 2.9% in September. Rising food costs drove the uptrend, reflecting poor harvests, especially in rice, and higher global grain prices. A sharply weaker yen also lifted import costs, adding to domestic inflation pressures. Core inflation remained well above the Bank of Japan’s 2% target, giving policymakers more room to raise interest rates. The data arrived as markets await a widely anticipated stimulus package from Prime Minister Sanae Takaichi’s government.
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