Japan’s core consumer price index (CPI), which excludes fresh food but includes energy, rose 2% year-on-year in January 2026, easing from 2.4% in December and marking the slowest pace of growth in two years. The figure matched market expectations and was consistent with the Bank of Japan’s 2% inflation target, reinforcing the view that there is no immediate need to adjust current monetary policy.
The BOJ has signaled that price gains are likely to moderate further, reflecting factors such as additional government support measures—particularly utility subsidies—and base effects following sharp price increases a year earlier. Prime Minister Sanae Takaichi has announced a series of fiscal measures to ease cost-of-living pressures, including proposals to suspend the 8% tax on food and to cut gasoline taxes. Even so, policymakers stressed that they remain focused on underlying inflation dynamics rather than transient or one-off influences.
