Japan's CPI Rises 3.2% Amid Inflation Pressures

Japan's Consumer Price Index (CPI) rose 3.2% in January 2025, marking the fastest pace since June 2023, driven by rising costs of rice and energy. The core CPI, excluding fresh food, also saw a notable increase, with prices for non-glutinous rice rising 71.8% and energy prices up 10.8%. Meanwhile, the overall CPI, including fresh food, climbed by 4.0%, representing the sharpest rise in two years, largely due to high vegetable prices. The Bank of Japan responded to ongoing inflationary pressures and strong wage growth by raising its policy rate by 25 basis points to 0.5%, the highest level in 17 years. This monetary policy shift is expected to support the Japanese Yen, which has been impacted by the previous ultra-loose monetary policies. Despite these measures, the timing of further rate hikes remains uncertain.