Japan inflation cools to 2.1%, lowest since March 2022, but rice prices loom large ahead of election
An employee at the Celsior Wadamachi supermarket in Yokohama, Japan, on Thursday, January 15, 2026. Rising food costs are an important component causing inflation to rise even further. Friday’s data is expected to show consumer price growth has remained above the central bank’s 2% target for four consecutive calendar years.
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Japan’s headline inflation rate It slowed sharply from 2.9% in November to 2.1%, its lowest level since March 2022, as easing price pressures clashed with political focus on living costs and an upcoming central bank decision.
This was the 45th month in a row that the inflation figure was above the Bank of Japan’s 2% target.
Core inflation, which excludes fresh food prices, was 2.4%, in line with analysts’ forecasts, and was at its lowest level since October 2024. This was well below 3% in November.
The “core” inflation rate, which excludes fresh food and energy prices, fell to 2.9% from 3% in the previous month.
Japan’s full year inflation According to government data, this rate was 3.2%. Inflation reached a two-year high in January 2025, then began to decline throughout the year.
However, Japan saw rice inflation reach its highest level in 50 years in May, and rice prices rose to record levels during that period.
Rice inflation in December was 34.4%, marking the seventh consecutive decline from a year ago.
Despite this, rice prices in Japan remain close to record levels. Data from the Ministry of Agriculture of Japan showed average price A 5-kilogram bag of rice was worth 4,267 yen in the week ending January 11.
In 2025, rising rice prices and careless comments cost then agriculture minister Taku Eto his job, reportedly prompting former prime minister Shigeru Ishiba to take personal responsibility for lowering prices when rice shortages hit.
early election
The data comes as Prime Minister Sanae Takaichi prepares to dissolve Japan’s Lower House today in preparation for early elections on February 8.
Takaichi has made tackling the cost of living a priority and has pledged to suspend Japan’s 8% food tax for 2 years to help households with rising living costs.
Last year his government prepared a massive $135 billion stimulus package for the country, which included measures to expand local government grants as well as provide subsidies for electricity and gas bills.
The Bank of Japan will also announce its policy decision later today, but economists polled by Reuters largely expect a peg at 0.75%. Fresh inflation and GDP forecasts for 2026 will also come from the BOJ.
