Tokyo Inflation Cools Amid Government Assistance, Industrial Output Dips
Tokyo, Japan - Consumer inflation in Tokyo, Japan, is projected to slow in February as the government reimplements measures to mitigate the impact of soaring energy costs. According to a Reuters poll, the core consumer price index (CPI), a key indicator of nationwide price trends, is estimated to rise by 2.3% year-on-year this month, down from January's 2.5% increase.
"Despite ongoing food price increases, core CPI growth is expected to decelerate due to lower government-supported electricity and gas prices," said Shunpei Fujita, economist at Mitsubishi UFJ Research and Consulting.
National CPI data released Friday revealed a 3.2% annualized increase in January, marking a 19-month high. This strengthens expectations that the Bank of Japan (BOJ) will continue hiking interest rates from their current low levels.
For nearly three years, inflation has surpassed the BOJ's 2% target, underscoring persistent upward price pressures. In January, the BOJ raised its short-term interest rate to 0.5% from 0.25%, the highest level in 17 years. Governor Kazuo Ueda has indicated a willingness to further tighten monetary policy if the inflation outlook continues to improve.
Tokyo's CPI is scheduled for release by the Ministry of Internal Affairs at 8:30 a.m. on February 28 (2330 GMT February 27).
Meanwhile, the poll suggests Japan's industrial output may decline by 1.2% in January compared to the previous month, marking a third consecutive month of contraction. This reflects sluggishness in the global manufacturing sector.
Retail sales are anticipated to have grown by 4% in January year-over-year, the highest rate since February 2022, driven by strong automobile sales. The Ministry of Economy, Trade, and Industry will publish factory output and retail sales figures at 8:50 a.m. on February 28 (2350 GMT February 27).