Tokyo has recorded its lowest inflation growth since the previous year in November, with a rate of just 2.3%, the Ministry of Internal Affairs reported today. This slowdown aligns with the Bank of Japan’s (BOJ) expectations of diminishing price pressures and lends credence to their decision to maintain current economic stimulus measures.
The capital’s more moderate cost increases were influenced by lower prices for utilities and processed foods, contributing to an inflation rate that fell short of projections. Core inflation figures, which exclude volatile food and energy prices, also reflected a deceleration, rising only 3.6% and showing a trend of gradual easing over recent months.
These developments support BOJ Governor Kazuo Ueda’s view that inflationary pressures are likely to continue receding, potentially delaying any imminent changes in monetary policy. The focus remains on wage growth as a key factor in the central bank’s long-term inflation strategy.
The BOJ has maintained a cautious stance despite inflation outstripping its target for the 19th consecutive month as of November 24. The central bank attributes the persistent rise to transitional and cost-push factors rather than sustainable demand-driven pressures. Consequently, the BOJ is deferring any policy adjustments until after spring wage data becomes available.
In addition, three BOJ members have recently set expectations in media statements, indicating that there will not be a swift shift in policy ahead of upcoming wage negotiations. Despite raising its near-term inflation forecast slightly to an average of 2.8%, the BOJ anticipates a decline to around 1.7% by fiscal year 2025, suggesting an eventual return to below-target levels after an extended period above the target.
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