Japan inflation slows to 3.1 pct in February

TOKYO

Japan’s consumer prices rose 3.1 percent in February from a year earlier, slowing from the four-decade highs seen in previous months, government data showed on March 24.

The figure, which excludes volatile fresh food, met market expectations and comes after the government introduced relief measures for soaring energy bills.

It is the first deceleration in over a year, marking a fall from January, when prices jumped 4.2 percent on-year, the highest level since September 1981, fueled in part by higher energy bills.

UBS economist Masamichi Adachi had said ahead of the data release that he expected lower inflation in February “due to a discount on energy price with the government’s subsidies,” which were announced in October and came into effect this year.
The drop is also due in part to the comparison with data from February 2022, when prices began to rise in Japan following decades of sluggish inflation or deflation.

The 3.1 percent rise is above the Bank of Japan’s longstanding 2 percent target, which has been surpassed every month since April last year.

But it remains lower than the sky-high inflation seen in the United States and elsewhere, with central banks worldwide hiking interest rates to tackle rising prices.

When both fresh food and energy prices are excluded, Japan’s figure for February is 3.5 percent.

The BoJ views the price increases as the result of temporary factors, including the war in Ukraine, so sees no reason to tweak its monetary easing measures.