Tokyo CPI rises more than expected in Dec, supports rate hike bets
2024.12.26 19:23
Investing.com– Tokyo consumer price index inflation grew more than expected in December due to increased price pressures, keeping alive chances of a near-term rate hike by the Bank of Japan (BoJ).
, which excludes volatile fresh food items, rose 2.4% year-on-year in December, government data showed on Friday. The reading was slightly below expectations of 2.5% and picked up from the 2.2% seen in the prior month.
A core reading that excludes both energy and fresh food costs rose 1.8% in December from 1.9% in the prior month. The reading is closely watched as a gauge of underlying inflation by the Bank of Japan, but remained below the central bank’s 2% annual target for a ninth straight month.
inflation rose 3.0% from 2.6% in the prior month.
Muted underlying inflation could limit the BOJ’s plans to keep raising interest rates, given that the central bank has signaled that it will seek more signs that inflation will sustainably remain at its 2% target.
The Bank of Japan ended negative interest rates in March and increased its short-term policy rate to 0.25% in July. It has indicated a willingness to raise rates further if wage and price trends align with its forecasts.
Earlier this week, BOJ Governor Kazuo Ueda said that the economy is expected to make progress toward sustainably reaching the central bank’s 2% inflation target next year, hinting that an interest rate hike could be approaching.
The BOJ kept rates steady this month but is expected to hike rates at its Jan. 23-24 policy meeting. A Reuters poll earlier this month expects the BOJ to hike interest rates to 0.5% by March next year.
