MNI BRIEF: Japan Jan Tokyo Core CPI Rises 2.5% Vs. Dec +2.4%
MNI (TOKYO) - The year-on-year rise in Tokyo core inflation accelerated to 2.5% in January from December’s 2.4%, above the Bank of Japan's 2% price target for the third straight month, data from the Ministry of Internal Affairs and Communications showed on Friday.
The January index was driven by higher food excluding perishables (+4.7% vs. +4.0%) and households’ durable goods (+8.0% vs. +7.3%). The result was within BOJ forecasts, which expected inflation to stay at around 2%.
The core-core CPI (excluding fresh food and energy) – a key indicator in the underlying trend of inflation – rose 1.9% y/y in January, also accelerating from +1.8% in December and stayed below 2% for the 10th straight month.
Tokyo saw processed food prices, a key BOJ focus, rise 3.0% in January, accelerating from December’s 2.5%, while services prices rose 0.6% in January vs. December’s 1.0%.
The data underscored the Bank of Japan’s view that inflation is on track, supporting a further rate hike following the 25 basis point increase last week to 0.50%. (See MNI BOJ WATCH: Ueda Flags More Hikes, No Clear Timeline)
Markets have priced in an additional 25bp increase by December.