Investing.com-- Consumer inflation in Japan’s capital eased more than expected in November and came closer to the Bank of Japan’s target range as food prices eased further from highs seen earlier this year, while import costs also stabilized.
Tokyo core consumer price index inflation- which excludes volatile items such as fresh food, rose 2.3% in November, data from the Statistics Bureau showed on Tuesday. The reading was lower than expectations of 2.4%, and fell from last month’s reading of 2.7%.
Month-on-month, Tokyo core CPI was flat after a 0.4% rise in October.
A core reading that excludes both fresh food and fuel prices read 3.6% in November, down from 3.8% in the prior month. The core reading, which is used as an indicator of underlying inflation by the Bank of Japan, has now consistently pulled back from 40-year highs hit earlier in 2023.
Overall Tokyo CPI inflation rose 2.6% in November from 3.3% in the prior month.
While inflation remained above the BOJ’s 2% annual target for an 18th consecutive month, it was now the closest it has been to the annual target since June 2022. The core CPI reading was also at its lowest level for the year.
Still, pressure remained on the central bank to eventually begin tightening its ultra-loose policy. The bank is also expected to end its yield curve control measures in 2024, although BOJ officials have given no such indication, and have largely reiterated plans to keep policy loose.
Tuesday’s reading comes after a mild pick-up in countrywide inflation in October, although the trend appears to be petering out amid easing oil prices and recent strength in the yen.
The Tokyo CPI reading usually heralds a similar trend in nationwide inflation data, which is due later in December.
Japanese consumer spending also appeared to be cooling in recent months, with retail sales data missing expectations for October amid pressure from relatively high inflation, stagnant wage growth and a weak yen.
Japan’s gross domestic product also shrank much more than expected in the third quarter.