Investing.com-- Japanese consumer price index inflation grew slightly more than expected in November, pointing to a sustained uptick in inflation that could push the Bank of Japan into raising interest rates early in 2025.
National core CPI, which excludes volatile fresh food items, grew 2.7% year-on-year in November, government data showed on Friday. The reading was above expectations of 2.6% and picked up from the 2.3% seen in the prior month.
A core CPI reading that excludes both fresh food and energy costs rose to 2.4% year-on-year in November from 2.3% in the prior month, remaining above the BOJ’s 2% annual target. The reading is closely watched by the BOJ as a gauge of underlying inflation, and remained above the central bank’s target for a third consecutive month.
Headline CPI inflation surged to a four-month high of 2.9% from 2.3% in the prior month. Strong private consumption, amid improving wages, was a key driver of higher inflation, with spending on discretionary items also increasing.
Friday’s data comes just a day after the BOJ kept interest rates unchanged in its final meeting for the year, and offered scant cues on when it will raise interest rates again.
But the central bank forecast a steady uptick in inflation through the coming year- a trend that could spur an early rate hike, especially if inflation picks up further in the coming months.
Tokyo CPI data for December, due next week, is set to offer more cues on this trend.
BOJ Governor Kazuo Ueda also signaled that wage negotiations between major labor unions and companies, set to take place in spring, will be a key point of focus for the BOJ.