Japan’s key inflation gauge eased to the slowest pace in two years, posing a communication challenge for a central bank that will likely stay determined to raise the benchmark interest rate when the timing is right. The yen weakened after the data.
Consumer prices excluding fresh food rose 2% from a year earlier in January, the smallest gain since January 2024, according to figures released by the Ministry of Internal Affairs and Communications Friday. That matched the median economist forecast and came after the gauge climbed 2.4% in the previous month.
The measure that also strips out energy to reflect underlying strength increased 2.6%, well above the Bank of Japan’s 2% target. Overall inflation that includes everything dropped to 1.5%, slipping below 2% for the first time since March 2022.