Japan's Inflation Slows to 1.5% in January: Lowest in Nearly Three Years

Inflation Falls Below Target Japan's consumer price index (CPI) rose by 1.5% year-on-year in January, reaching its lowest level since March 2022.
With this data, inflation has fallen back below the Bank of Japan's (BoJ) official target after remaining above the 2% threshold for 45 consecutive months.
Core Data Aligns with Expectations Core inflation, which excludes fresh food prices, slowed to 2% in January from 2.4% in December.
This rate, which aligned with economists' expectations, was recorded as the lowest level since January 2024.
The "core-core" inflation indicator, which excludes both fresh food and energy prices, also saw a decline, dropping from 2.9% to 2.6%.
Drivers of Price Declines The slowdown in inflation was driven by price decreases in fresh food, raw meat, and fresh flowers, as well as a sharp decline in petroleum products.
These movements were decisive in the downward momentum of the overall index.
Central Bank's Future Outlook In its January assessment, the Bank of Japan revised its inflation forecasts upward for the 2026 fiscal year, which begins on April 1.
The bank raised its core inflation projection from 1.8% to 1.9% and its core-core inflation forecast from 2% to 2.2%.
These revisions indicate expectations for higher price increases compared to the projections made in October 2025.