A customer visits a store in Togoshi Ginza Street in Tokyo on January 23, 2025.
Philip Fong | AFP | Getty images
Japan inflation in January has climbed 4% over a year, reaching its highest level since January 2023, further strengthening the case for the country’s central bank increases.
The central inflation rate – which excludes prices from fresh food – increased to 3.2% compared to 3% During the previous month and beat economists’ expectations by 3.1%, according to a Reuters survey. This figure was the highest since June 2023.
The “nucleus-nucleus” inflation rate, which removes fresh food and energy prices and is closely monitored by the BOJ, climbed slightly to 2.5% compared to 2.4% during the month previous.
The rate of inflation of the securities, which had reached 3.6% in December, remained above the target of 2% of the bank by 2% for 34 consecutive months.
Immediately after the release of data, the Yen strengthened 0.15% to negotiate at 149.39 against the dollar.
Inflation figures strengthen the case of rate increases by BOJ, which deliberated tightening rates at its January meeting, with its Summary of opinions Warning of inflation and weakness risks in the yen.
“It will be necessary that the bank adjusts the degree of monetary accommodation from the point of view of the avoidance of the amortization of the yen and the overheating of financial activities, which both seem to excessively high expectations of relaxation continuous monetary “, the summary of the Boj read.
The data also occurs after growth in the country’s GDP has beaten expectations on a quarter -in -quarter and annualized basis, increasing 0.7% and 2.8% respectively.
However, GDP growth in full year for 2024 has slowed 0.1%, a sharp drop in growth of 1.5% observed in 2023.
In a note before the inflation data press release, Commonwealth Bank of Australia said the case for an increase in previous rates has been strengthened in recent weeks due to high Japanese economic data.
Analysts from Bank of America wrote in a post earlier this week that the BOJ was also “increasingly concerned” by the risk of inflation, which will increase the possibility of previous increases and a more terminal rate pupil.
Analysts also provide that BOJ will increase in June and December and increase its terminal rate forecast to 1.5% with two additional increases in June 2026 and the first quarter of 2027.
