Japan inflation slows but wage growth and price pressures keep rate hikes in play

Japan’s underlying inflation rate, which discounts the impact of energy and fresh food volatility, stood last February at 2.6 per cent year-on-year, one tenth above the January rise and its highest level in eleven months, leaving the Bank of Japan free to undertake further interest rate hikes.

Japan inflation slows but wage growth and price pressures keep rate hikes in play

Japan’s core inflation eased to 3% in February, down from 3.2% in January, but remained above the Bank of Japan’s 2% target for the 35th consecutive month—keeping expectations of further rate hikes alive. The figure, which excludes volatile fresh food prices, came in slightly above economists’ expectations of 2.9%, while headline inflation slowed to 3.7% from January’s 4%—its highest level in two years. The closely watched “core-core” index, whi…