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Japan inflation falls below BOJ’s 2% target for first time since March 2022
January inflation in Japan dropped to 1.5%, ending 45 months above the Bank of Japan's 2% target due to government relief on energy and food costs.
- In January, Japan's headline CPI fell to 1.5%, marking its weakest since March 2022 and ending a 14.7% run above the BOJ's 2% target.
- Government action to scrap the add-on gasoline tax and release stockpiled rice eased inflation, while Takaichi's government plans further food-price measures in the coming months.
- Core inflation eased to 2%, matching economists polled by Reuters and down from December's 2.4%, while core-core inflation fell to 2.6% from 2.9%.
- The drop in inflation raises questions over the BOJ's long-term prospects for further rate increases after its 25 basis points rate hike in January, which depended on inflation and economy growth metrics.
- The BOJ upgraded forecasts for fiscal 2026, projecting core inflation at 1.9% and core-core at 2.2%, and warned inflation may rise later this year as government measures take effect.
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Japan’s key inflation gauge eased to the slowest pace in two years on the back of temporary factors, in an outcome unlikely to shake the central bank’s resolve to press ahead with rate hikes when the timing is right. The yen weakened after the data.
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The Japanese CPI falls to a minimum of 2022 and complicates the Bank of Japan’s plans to permanently abandon its negative rate policy
Coverage Details
Total News Sources4
Leaning Left1Leaning Right0Center2Last UpdatedBias Distribution67% Center
Bias Distribution
- 67% of the sources are Center
67% Center
L 33%
C 67%
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