Japan’s core inflation hits 19-month high

Japan’s core consumer inflation hit 3.2 per cent in January for its fastest pace in 19 months, data showed on Friday, reinforcing expectations that the central bank will keep raising interest rates from levels still seen as low.

Bond yields rose on the data, as markets factor in the chance that the Bank of Japan (BOJ) could hike interest rates more aggressively than initially thought as inflationary pressure mounts.

The year-on-year increase in the core consumer price index (CPI), which excludes fresh food prices, slightly exceeded a median market forecast for a gain of 3.1 percent and followed December’s rise of 3.0 percent.

A separate index stripping out costs of both fresh food and fuel, which is closely watched by the BOJ as a better gauge of demand-driven inflation, rose 2.5 percent in January from a year earlier, the data showed.

It was the fastest year-on-year pace since March 2024, when the index rose 2.9 per cent.

WAM