TOKYO (AFP) – Japanese inflation eased in February, government data showed yesterday, with prices excluding fresh food rising 3.0 per cent year-on-year in the world’s fourth-largest economy.
The core Consumer Price Index (CPI) slowed from 3.2 per cent in January, remaining above the Bank of Japan’s two-per cent target which has been exceeded every month since April 2022.
Government subsidies for electricity and gas bills contributed to the deceleration, the internal affairs ministry said.
February’s core reading narrowly beat expectations of 2.9 per cent, as rising prices for petrol, food and accommodation among other necessities continued to squeeze households.
“We want to protect people’s livelihoods from high prices while paying close attention to the impact of price trends on households and business activities,” top government spokesman Yoshimasa Hayashi said. Measures taken by Prime Minister Shigeru Ishiba include subsidies, the release of stockpiled rice and efforts “to realise wage increases that will not be defeated by rising prices”, Hayashi told reporters.
In February, rice prices were up 81 per cent year-on-year – a record for the grain – while chocolate was 30 per cent more expensive.
This month, the government began a rare auction of its emergency rice stockpiles in a bid to help drive down the staple’s surging price.
Japan has previously tapped into its reserves during disasters, but this was the first time since the stockpile was created in 1995 that supply chain problems have prompted the move.
The price of cabbage rose 130 per cent – a trend that has been dubbed “cabbage shock” by local media in recent months, after last year’s record summer heat and heavy rain ruined crops.
Overall, including volatile fresh food prices, inflation in February was up 3.7 per cent year-on-year, exceeding economist expectations of 3.5 per cent but slowing from 4.0 per cent in January.
This deceleration was driven both by fresh food inflation coming off the boil and by the resumption of subsidies for electricity and gas”, explained Head of Asia-Pacific of Capital Economics Marcel Thieliant. Yet the core inflation, excluding both fresh food and energy prices, accelerated slightly to 2.6 per cent year-on-year, hitting an 11-month high.
“The strength in underlying inflation in February suggests that the Bank of Japan could hike rates at its next meeting in May but we still expect that uncertainty over the impact of US tariffs will delay a move to July,” Thieliant said.
The Bank of Japan (BoJ) left its key interest rate unchanged this week, warning about the global economic outlook given United States President Donald Trump’s trade policies.
The BoJ is aware that rising prices “are contributing negatively to people’s lives”, Governor Kazuo Ueda told reporters on Wednesday.
“A rise in food prices, including rice… can affect the basic pace of inflation through a change in households’ mindset and expectation of future inflation,” he said.
