Analysis: Tokyo inflation cooled more than expected, but it is unlikely to prevent the Bank of Japan from continuing to raise interest rates.

According to ChainCatcher reports, data from Jin10 shows that Tokyo’s inflation has cooled more than expected, as pressures from food and energy prices have eased. However, this is unlikely to prevent the Bank of Japan from continuing to raise interest rates. Data released by Japan’s Ministry of Internal Affairs and Communications on Friday indicate that the consumer price index (CPI) excluding fresh food in Tokyo for December rose 2.3% year-on-year, a significant slowdown from 2.8% in the previous month. This is the first slowdown in inflation since August, mainly reflecting a moderation in food price increases and a decline in energy costs. Economists previously expected this indicator to slow to 2.5%. The overall inflation rate decreased from 2.7% in the same period last year to 2.0%; the core inflation rate excluding energy prices also slowed to 2.6%. Tokyo’s inflation data is often seen as a leading indicator of nationwide inflation trends. Despite the clear slowdown in overall inflation data, it remains above the Bank of Japan’s 2% target, prompting the central bank to continue on the path of further tightening policies.