Japan's annual inflation rate decreased to 2.3% in October 2024, down from 2.5% in the previous month, marking the lowest level since January.
Japan inflation slows in October
Electricity prices saw the smallest increase in six months, rising by just 4.0% compared to 15.2% in September, as the impact of the energy subsidy removal in May eased. Gas prices also rose at a slower pace, up 3.5% from the previous year, down from 7.7%. In addition, price increases moderated for furniture and household items (4.4% vs. 4.8%) and cultural goods (4.3% vs. 4.8%). Prices for communication services fell further (-3.5% vs. -2.6%) and education costs remained stable (-1.0%). On the other hand, food prices edged up by 3.5%, compared to 3.4% in September, and housing costs rose slightly (0.8% vs. 0.7%). Transport prices jumped 0.5%, up from 0.1%, with notable increases in clothing (2.8% vs. 2.6%), healthcare (1.7% vs. 1.5%), and miscellaneous goods (1.1% vs. 0.9%).
Core inflation figures
Core inflation, which excludes fresh food but includes energy costs, also slowed to 2.3% in October, down from 2.4% in September, but still above the expected 2.2%. Month-over-month, the Consumer Price Index (CPI) rose by 0.4%, a reversal from the 0.3% decline in September.
Food prices growth accelerates
Food prices in Japan rose by 3.5% year-on-year in October, slightly up from 3.4% in the previous month. The rise in food costs was driven by higher prices for meats (5.0% vs. 4.1%), cakes and candies (5.0% vs. 3.3%), cereals (13.5% vs. 10.4%), and beverages (6.1% vs. 3.5%). However, price increases slowed for fresh fruits (6.6% vs. 10.6%), fresh vegetables (2.0% vs. 6.8%), cooked food (1.8% vs. 2.1%), and oils, fats, and seasonings (0.2% vs. 0.3%). Additionally, fish and seafood prices fell by 0.3%, and dairy products and eggs dropped by 2.1%, compared to smaller declines in the previous month.
Other core data
Japan’s core CPI, excluding fresh food but including fuel, rose by 2.3% year-on-year in October 2024, marking the lowest level in six months. This was slightly above the expected 2.2%, but still indicative of inflationary pressures. Core inflation has remained at or above the Bank of Japan's 2% target for over two years, prompting a more hawkish stance from the central bank. In response to persistent inflation, the BOJ raised interest rates in March and July and signaled readiness to raise them further. Governor Kazuo Ueda indicated that the BOJ will continue to make monetary policy decisions on a meeting-by-meeting basis, with the possibility of another rate hike as soon as December, particularly in light of the yen's recent weakness.
