TOKYO: Japan’s inflation rate fell below the Bank of Japan’s 2 percent price stability target for the first time since March 2022, as government data released on February 20 showed easing price pressures at the start of 2026. The nationwide consumer price index rose 1.5 percent in January from a year earlier, down from 2.1 percent in December, reflecting softer energy costs and a slower pace of food inflation after last year’s increases.
The core consumer price index, which excludes volatile fresh food prices and is closely watched by the central bank, rose 2.0 percent year on year in January, slowing from 2.4 percent in December. A narrower gauge that strips out both fresh food and fuel, often used to track underlying price trends, rose 2.6 percent, down from 2.9 percent the previous month. The core reading was the lowest in about two years, according to the same data.
Energy prices were a major drag on the headline figure. Energy costs fell 5.2 percent from a year earlier in January, compared with a 3.1 percent decline in December. The data also showed food prices excluding fresh items rose 6.2 percent, easing from 6.7 percent a month earlier. Officials and market reporting attributed part of the slowing pace to the impact of fuel subsidies, changes affecting gasoline costs, and base effects after last year’s food price increases.
Fuel and food effects
Japan’s price data are published by the Ministry of Internal Affairs and Communications and include multiple measures that remove categories prone to short term swings. Headline inflation covers all items, while the core index excludes fresh food. The gauge that also excludes fuel aims to reduce the influence of energy price moves, which have been affected by government measures. Even with the headline rate back below 2 percent, the fuel-stripped measure remained above the central bank’s target in January.
The inflation update comes as the Bank of Japan continues to evaluate whether price gains are being sustained alongside broader economic conditions. The central bank targets a stable 2 percent inflation rate and has been moving away from its long period of ultra-loose monetary policy. The BOJ’s short-term policy rate stands at around 0.75 percent, a level last seen about three decades ago, after a rate increase in December 2025.
Bank of Japan policy setting
The BOJ ended its negative interest rate policy in 2024 and has since raised rates as inflation stayed above its target for an extended period. In its January 2026 outlook report, the BOJ projected the consumer price index excluding fresh food would rise 1.9 percent in fiscal 2026, following a 2.7 percent rise projected for fiscal 2025, based on the report’s median view of policymakers.
Separately, inflation in Tokyo’s 23 wards, a leading indicator for national trends, also eased to around 2 percent in January. Japan’s statistics bureau said the next national CPI report, covering February data, is scheduled for March 24. – By Content Syndication Services.