Japan core inflation climbs to a 16-month high, boosting case for rate hikes

Japan’s core inflation rate reached a 16-month high of 3% in December, aligning with economists’ expectations and surpassing the previous month’s 2.7% growth. This sustained increase in inflation for 33 consecutive months supports the case for a rate hike by the Bank of Japan, as the headline inflation rate also rose to 3.6%, its highest level since January 2023, providing the central bank with more flexibility to adjust rates. The “core-core” inflation rate, excluding prices of fresh food and energy, remained steady at 2.4%, prompting a marginal weakening of the yen against the dollar following the data release.

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