Japan inflation rises to 3.2%, fastest in 19 months

Japan’s core consumer inflation rose to 3.2% in January, the fastest pace in 19 months, data showed on Tuesday, reinforcing expectations that the Bank of Japan will continue to raise interest rates from still-low levels.

Bond yields rose on the data, as markets priced in the possibility of the BOJ raising rates more than initially expected given mounting inflationary pressures.

The annual increase in the consumer price index, which excludes fresh food prices, beat a median market forecast for a 3.1% increase.

A separate measure that excludes the costs of both fresh food and fuel, closely watched by the Bank of Japan as a better gauge of demand-driven inflation, rose 2.5% in January from a year earlier, the data showed.