Japan inflation eases in February as core CPI misses forecasts
Mar 24th 2026 · Japan
Headline CPI eased to 1.3% in February and core inflation slowed to 1.6% as energy deflation from subsidies and tax moves offset price pressures, leaving inflation below the BOJ 2% target.
- Headline CPI fell to 1.3% in February, the lowest since March 2022 and down from 1.5% in January.
- Core inflation excluding fresh food slowed to 1.6%, below the Reuters forecast of 1.7% and down from 2.0% in January.
- Core core inflation excluding food and energy was 2.5%, slightly lower than January's 2.6%.
- Falling energy prices, driven by government subsidies, a gasoline price curb and removal of a gas tax surcharge, was the main factor behind the slowdown.
- Utilities costs dropped 5.5% year on year, with electricity down 8.0% and gas down 5.1%.
- The Bank of Japan left its rate at 0.75% last week and forecasts fiscal 2026 core and core core inflation at 1.9% and 2.2% respectively.
- Analysts warn the Middle East conflict could push inflation higher and see the BOJ potentially raising rates in June or July if risks persist.