Japan’s Core Inflation Steady at 3.0% Ahead of Rate Hike Decision

Japan’s core inflation rate is projected to remain at a significant 3.0% in November, according to a recent poll conducted by Reuters. This figure continues to exceed the Bank of Japan’s inflation target of 2%, despite a decrease in food price increases that has somewhat alleviated consumer pressures. The nationwide core consumer price index (CPI), which factors in energy costs while excluding fresh food prices, is expected to reflect this stability.

Economists surveyed indicated that the inflation rate for November will mirror that of October, which also recorded 3.0%. This follows a 2.9% rise in September and a 2.7% increase in August. Analysts point to a slowdown in food price inflation as a primary contributor to this steadiness, which has offset rising energy costs resulting from the conclusion of the government’s summer utility subsidies.

The core inflation rate has consistently surpassed the Bank of Japan’s target for more than 3.5 years. As the central bank prepares for its monetary policy meeting on December 18-19, expectations are mounting for an increase in interest rates. Sources within the financial sector suggest that the Bank of Japan is likely to raise the short-term interest rate from the current 0.5% to 0.75% during this meeting.

The official announcement regarding the November CPI data is scheduled for 8:30 a.m. on December 19 (equivalent to 23:30 GMT on December 18). This release will occur just hours before the Bank of Japan discloses its decision, making it a crucial moment for investors and market analysts alike.

As Japan navigates these inflationary pressures, the balance between managing consumer costs and stimulating economic growth remains a vital focus for policymakers. The upcoming interest rate decision will be closely scrutinized for its potential impact on both domestic and international markets.