Japan inflation falls below BOJ’s 2% target for first time since March 2022
Owners of a 70-year-old store of “takoyaki,” or octopus balls, chat at a restaurant while cooking food on a street in Tokyo’s Taito Ward on Feb. 21, 2025.
Richard A. Brooks | Afp | Getty Images
Japan’s headline inflation rate fell to 1.5% in January, its lowest level since March 2022.
That reading ended a 45-month streak in which inflation remained above the Bank of Japan’s 2% target.
The core inflation rate, which excludes fresh food prices, fell to 2%, the lowest level since January 2024, and in line with forecasts of 2% by economists polled by Reuters. There was a decrease compared to 2.4 percent in December.
“Core” inflation, excluding fresh food and energy prices, was 2.6%, compared to 2.9% in December.
The decline in the prices of fresh food, raw meat and fresh flowers, as well as the sharp decline in petroleum products, were effective in the slowdown.
Goods inflation fell from 2.7% to 1.6%, its lowest level since August 2021, while services inflation remained stable at 1.4%.
In January, the Bank of Japan raised its inflation forecasts for fiscal 2026, which begins April 1. In the October 2025 outlook, it increased core inflation to 1.9% and “core” inflation to 2.2% from 1.8% and 2% respectively.
BOJ also wrote: appearance Annual growth in consumer prices is likely to fall below 2% in the first half of 2026 as food prices stabilize and government efforts to ease costs of living continue.
Rice inflation slowed for the eighth consecutive month, falling to 27.9%.
These measures include Prime Minister Sanae Takaichi’s election promise to suspend the 8 percent food tax for two years.
Takaichi won a landslide victory in the Lower House elections held on February 8; the ruling Liberal Democratic Party won 316 seats; this was the strongest performance by a single party since the end of the Second World War.
The inflation reading came after Japan’s economy narrowly avoided a technical recession on Monday, growing 0.1% in the fourth quarter.
— This is breaking news, please check back for updates.
