An employee at the Celsior Wadamachi supermarket in Yokohama, Japan, on Thursday, Jan. 15, 2026. Soaring food costs are a key component driving broader inflation higher, with data Friday expected to show consumer\u00a0price\u00a0growth has stayed above the central bank’s 2% target for four straight calendar years. <\/p>\n
Bloomberg | Bloomberg | Getty Images<\/p>\n
Japan’s headline inflation rate<\/a> slowed sharply to 2.1%, its lowest level since March 2022, down from 2.9% in November, as easing price pressures collide with political focus on living costs and a looming central bank decision.<\/p>\n This was the 45th straight month that the inflation figure has been above the Bank of Japan’s 2% target. <\/p>\n Core inflation, which strips out prices of fresh food, stood at 2.4%, in line with analysts’ estimates and its lowest level since October 2024. That was sharply lower than November’s 3%.<\/p>\n The so-called “core-core” inflation rate \u2014 which strips out prices for fresh food and energy \u2014 eased to 2.9% from 3% a month earlier.<\/p>\n Japan’s full-year inflation<\/a> stood at 3.2%, according to government data. Inflation hit a two-year high in January 2025, before tapering down over the course of the year.<\/p>\n However, Japan saw rice inflation hit its highest in over 50 years<\/a> in May, and rice prices soared to record highs then. <\/p>\n Rice inflation for December came in at 34.4%, marking the seventh straight month of decline from a year ago. <\/p>\n Despite that, rice prices in Japan remain near record levels. Data from Japan’s agriculture ministry showed the average price<\/a> of a 5-kilogram bag of rice was at 4,267 yen for the week ended Jan. 11. <\/p>\n Back in 2025, soaring rice prices and careless comments cost then farm minister Taku Eto\u00a0his job\u00a0and\u00a0reportedly prompted<\/a>\u00a0former prime minister Shigeru Ishiba to take personal responsibility for lowering prices as a rice shortage took hold. <\/p>\n “Goods inflation in Japan is still the main driver of inflation,” Marcel Theliant, Head of Asia Pacific at Capital Economics, told CNBC’s “Squawk Box Asia<\/a>” on Friday. <\/p>\n He noted that in 2025, import prices slowed as the yen strengthened, but they have since stopped falling. <\/p>\n “So it’s possible [that] goods inflation probably remains higher for longer, and that will keep inflation above the BOJ’s target for longer.”<\/p>\n This would possibly prompt an interest rate hike as soon as April, Theliant said.<\/p>\n