A customer shops at a supermarket in Tokyo on February 27, 2024.
Kazuhiro Legs | AFP | GettyImages
Japan's base inflation rate rose to a 16-month high of 3% in December, year-over-year, adding to the case for a rate hike from the Bank of Japan.
This was in line with inflation expectations from economists polled by Reuters and higher than the 2.7% price increase recorded in November.
The December reading means the country's core inflation has been in line with the Bank of Japan's 2% target for 33 months in a row. The basic inflation reading only comes up with fresh food prices, but includes energy.
Japan's headline inflation rate was 3.6%, accelerating sharply from 2.9% in November to its highest level since January 2023.
The reading comes amid a Bank of Japan policy meeting scheduled to end today. The strong inflation reading offers the BOJ more room to raise rates.
The so-called “core” inflation rate, which determines the prices of both fresh food and energy and is tracked by the BOJ, remained at 2.4%.
Immediately after the data release, the yen weakened slightly to trade at 156.1 against the dollar.
Economists polled by Reuters expect the BOJ to raise its key policy indicator by 25 basis points after today's meeting, or 0.5% – the highest level since 2008.
Public comments Governor Kazuo Ueda, as well as other senior BIJ officials, indicated the BOJ's willingness to increase rates.
Ueda said on January 16 that the central bank would raise rates if “improvements in the economy and prices continue,” according to a Reuters report.