Japan’s core inflation slowed in March due to mild rises in food prices while staying comfortably above the central bank’s 2% target, government data showed on April 19, 2024.
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Japan’s core inflation slowed in March due to mild rises in food prices while staying comfortably above the central bank’s 2% target, government data showed on Friday.
The nationwide core consumer price index (CPI), which excludes fresh food items, rose 2.6% in March from a year earlier after rising 2.8% in February. It matched the median market forecast.
The “core core” index, which excludes both fresh food and energy costs and is closely watched by the Bank of Japan as a key gauge of broader inflation trends, rose 2.9% after increasing 3.2% in February. It was the first time since November 2022 that the index fell below 3%.
Markets are seeking clues as to when the central bank would raise rates again after it ended negative rates last month in a landmark shift away from its decade-long super-easy monetary policy.
The BOJ has said a virtuous cycle of sustained, stable achievement of its 2% price target and strong wage growth was crucial for normalizing policy.
While Japanese companies offered their biggest wage hikes in 33 years this year, inflation-adjusted real wages have continued to fall for nearly two years. Some analysts expect lackluster domestic demand to bring inflation below the 2% inflation target later this year, complicating the BOJ’s path.
A weakening yen, while pushing up import prices, threatens to further exacerbate households’ purchasing power and weigh on consumption.