Japan Cpi Falls In Jan

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Japan Cpi Falls In Jan

Japan Cpi Falls Under Forecast In Jan With 2% Core Inflation

The latest CPI reading in Japan showed a decline, but its pace was still below the forecast. Additionally, the core inflation reached 2%, which is a 2-year low and shows that consumer spending has slowed down.

2% Y/Y jump was seen in the core CPI indicator for January, which was a little higher than the forecast of 1.9%. However, the reading shows much progress compared with December's reading of 2.3%.

Inflation Close To 2% Target Of Boj

And if we look at the CPI without accounting for energy/fresh food, an improvement from 3.7% to 3.5% Y/Y was seen. This reading is of significant importance as even the BOJ looks at it for making changes in the monetary policy.

The headline CPI also showed a reading of 2.2% Y/Y in January, while December's print showed 2.6%. On a M/M basis, a 0.1% jump was seen in the inflation.

The bottom line is that inflation has gone soft recently, so there's less pressure on the BOJ to ditch its loose monetary policy. While Japan's stock market may welcome this, it will be bad news for the JPY, which is already struggling against other currencies.

After the recent announcement, there's a greater chance that the BoJ will keep its policy the same during the March meeting. However, we must also remember that the BOJ had tied the policy tightening with a 2% inflation target.

Given that we are very close to the 2% target, the BOJ will likely provide hints on when to expect an exit from the current monetary policy.

The recent reading has also pushed some analysts to say that the first rate hike from BOJ is coming in April 2024. On the other hand, the BOJ has made it clear that the rate hikes (if any) will be gradual and slow.

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