Tokyo, Feb 13 - Japan's core consumer inflation likely slowed again in January, according to a poll of 17 economists, driven mainly by a retreat in gasoline prices and a softer pace of food price increases. The nationwide core consumer price index - which counts energy items but excludes fresh food - is forecast to have risen 2.0% in January from a year earlier, matching the rate recorded in January 2024 and down from a 2.4% increase in December.
Core consumer inflation in Japan has remained above the central bank's 2% target for nearly four years, as businesses continue to pass higher raw material costs through to customers. The expected easing in January appears linked to two distinct forces: lower gasoline prices after a provisional tax rate was abolished, and a continued deceleration in the pace at which food prices are rising.
"The drop in gasoline prices following the abolition of the provisional tax rate and the continued deceleration in food price increases likely weighed down inflation," said Ryosuke Katagi, market economist at Mizuho Securities.
The Bank of Japan left interest rates unchanged in January after raising its short-term policy rate to 0.75% from 0.5% in December. Despite holding rates steady for the month, the central bank maintained hawkish inflation forecasts and signalled a readiness to keep lifting borrowing costs if needed.
Market participants and policymakers will be watching the official consumer price index release from the internal affairs ministry, which is due at 8:30 a.m. on February 20 (2330 GMT on February 19). The poll results provide a near-term snapshot of inflation dynamics but will be superseded by the ministry's formal data.
For sectors sensitive to consumer prices and monetary policy - notably energy, food and consumer goods, as well as interest-rate-sensitive financials - the pace of inflation and the BOJ's next moves will be important drivers of earnings and valuation assumptions. The poll's reading points to modest easing but keeps inflation notably above the BOJ's target, reinforcing the central bank's rationale for remaining prepared to tighten policy further.
Summary
A poll of 17 economists projects Japan's core CPI rose 2.0% year-on-year in January, easing from December's 2.4% gain. The moderation is attributed to lower gasoline prices after a temporary tax cut and slower food price increases. The BOJ has kept rates steady since hiking the short-term policy rate to 0.75% in December and has signalled willingness to raise rates further. Official CPI data will be released by the internal affairs ministry on February 20 at 8:30 a.m. JST (2330 GMT on February 19).