Japan Core Inflation Rate

Japan’s core consumer price index, which excludes fresh food but includes fuel costs, rose 3% year-on-year in February 2025. While this marked a slowdown from January’s 3.2% increase, it still surpassed market expectations of 2.9%. This was the second consecutive month that core inflation exceeded forecasts, highlighting persistent inflationary pressures and bolstering the case for further interest rate hikes. For nearly three years, Japan’s core inflation has remained at or above the Bank of Japan’s 2% target. In response to strong wage growth and ongoing price pressures, the BOJ raised its policy rate by 25 basis points to 0.5% in January—the highest level in 17 years. However, in March, the central bank opted to hold rates steady as it assessed global economic risks, including the impact of higher U.S. tariffs on Japan’s economy.