Japanese Consumer Price Index Inflation

Japanese consumer price index inflation grew slightly more than expected in November, indicating a sustained increase that may lead the Bank of Japan (BOJ) to raise interest rates early in 2025.

Core CPI Growth

National core CPI, excluding volatile fresh food items, increased by 2.7% year-on-year in November, surpassing expectations of 2.6% and up from 2.3% the previous month.

A core CPI reading that excludes both fresh food and energy costs rose to 2.4% year-on-year in November from 2.3% the prior month, maintaining levels above the BOJ's 2% annual target for a third consecutive month. This reading is closely monitored by the BOJ as it reflects underlying inflation.

Headline CPI Inflation

Headline CPI inflation surged to a four-month high of 2.9%, up from 2.3% the month before. This increase was largely driven by strong private consumption and improving wages, with spending on discretionary items also rising.

BOJ's Interest Rate Decision

This data follows the BOJ's decision to keep interest rates unchanged in its final meeting of the year, providing few indications regarding future rate hikes. However, the central bank anticipates a consistent rise in inflation throughout the coming year, which could prompt an early rate hike if inflation continues to escalate.

Upcoming Indicators

Tokyo CPI data for December, set to be released next week, will provide additional insights into this inflation trend. Furthermore, BOJ Governor Kazuo Ueda highlighted that upcoming wage negotiations between major labor unions and companies will be crucial for the BOJ's monitoring.