JPY: Tokyo CPI Jumps to 2.6% YoY in February
Japanese Tokyo CPI index reading for February month came at 2.6% YoY versus 1.8% previous reading. Inflation increasing is positive for BoJ to hike in coming months. Yen is stronger after the news Flashed.
In February, Tokyo’s Consumer Price Index (CPI) increased to 2.6% YoY from the previous 1.8%, as reported by the Statistics Bureau of Japan on Tuesday. Meanwhile, the Tokyo CPI excluding Fresh Food and Energy slightly decreased to 3.1% YoY from January’s 3.3%.
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Moreover, the Tokyo CPI excluding Fresh Food met market expectations by reaching 2.5% for the same month.
JPY: Tokyo Inflation Resurges in Feb
Japanese Tokyo CPI index reading for February month came at 2.6% YoY versus 1.8% previous reading. Inflation increasing is positive for BoJ to hike in coming months. Yen is stronger after the news Flashed.
Tokyo Core Inflation Tops BOJ Target in February, Fueling Debate on Interest Rates
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In February, core inflation in Tokyo exceeded the Bank of Japan’s (BOJ) target as the impact of government fuel subsidies waned, signaling potential conditions for ending negative interest rates. However, an index excluding energy costs, a broader price trend indicator, slowed, prompting scrutiny on Japan’s ability to sustain robust wage hikes for consumption support.
The BOJ, set for a policy-setting meeting on March 18-19, will analyze this data among other factors to decide on phasing out its stimulus program. Tokyo’s core Consumer Price Index (CPI) rose 2.5% YoY in February, meeting market forecasts and surpassing January’s 1.8% increase. Another index excluding fresh food and fuel costs slowed to 3.1%, the slowest annual pace since February 2023.
Marcel Thieliant, Head of Asia-Pacific at Capital Economics, noted the slowdown, attributing it to processed food inflation. Despite Japan’s unexpected recession in Q4 2023, strong inflation and potential wage hikes may lead to the BOJ ending negative interest rates by April.
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Governor Kazuo Ueda cautioned against premature conclusions on sustainable inflation meeting the 2% target but acknowledged signs of economic recovery and positive wage outlook. Currently, the BOJ guides short-term rates at -0.1% and the 10-year government bond yield around 0% to stimulate growth and achieve its inflation target.
JPY: Tokyo CPI Rebounds in Feb, Focus on BOJ Hike
Japanese Tokyo CPI index reading for February month came at 2.6% YoY versus 1.8% previous reading. Inflation increasing is positive for BoJ to hike in coming months. Yen is stronger after the news Flashed.
Tokyo CPI Bounces Back in Feb, Boosts Prospects of Sticky Inflation and BOJ Rate Hikes
In February, Tokyo’s core CPI, excluding volatile fresh food prices, surged to 2.5% YoY, rebounding from January’s 22-month low of 1.6%, aligning with expectations. The headline CPI also rose to 2.6% YoY, recovering from the previous month’s 1.6%. Despite a dip in the core reading (excluding energy and fresh food) to 3.1%, it remains above the BOJ’s 2% target.
The robust inflation data positions Tokyo as an indicator for nationwide inflation, signaling an overall uptick. This comes amid mounting expectations of the BOJ initiating interest rate hikes as early as April. While sticky inflation provides motivation for the central bank to move away from ultra-loose policies, the BOJ has indicated a gradual approach to interest rate increases.
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