Japan’s core inflation hits 3% in February

Japan’s annual core consumer price inflation hit 3.0% in February, government data showed, remaining above the central bank’s 2% target and reinforcing market expectations for further interest rate hikes.

The increase in core inflation, which excludes the impact of volatile fresh food costs, exceeded a median market forecast of 2.9%. However, inflation slowed from the previous month’s 3.2%, largely due to the resumption of subsidies to curb fuel costs, according to Reuters.

A separate index, which excludes the effects of both fresh food and fuel costs and is closely watched by the Bank of Japan as a proxy for broader price trends, rose 2.6% in February year-on-year, compared to 2.5% in January. This represents the fastest year-on-year increase since March 2024, when it rose 2.9%.