Japan’s inflation rate fell to 1.5% in January, its lowest level since March 2022 and below the annualized 2% target set by the country’s central bank.
The latest reading snapped a run of 45 consecutive months in which inflation had remained above the Bank of Japan’s 2% goal.
Core inflation, which excludes fresh food prices, eased to 2%, the lowest level since January 2024 and matching the 2% forecast by economists.
Japan’s so-called “core-core” inflation rate, which excludes fresh food and energy prices, came in at 2.6%, down from 2.9% in December 2025.
The January inflation decline was attributed to price decreases for fresh food, raw meat, and flowers, as well as a drop in petroleum costs.
Rice inflation slowed for an eighth straight month in January but was still extremely high at 27.9%.
The Bank of Japan recently upgraded its inflation forecast for 2026, projecting core inflation at 1.9% and “core-core” inflation at 2.2%.
The central bank said that the year-over-year rise in consumer prices is likely to fall below 2% in the first half of this year as food prices stabilize.
The inflation reading comes after Japan’s economy grew an annualized 0.1% in the fourth quarter of 2025, narrowly avoiding a technical recession for the Asian nation.
The Bank of Japan is widely expected to raise interest rates this year to 1%, not to combat inflation but rather to support the yen currency, which has weakened.
The Japanese central bank is next scheduled to decide on interest rates March 19.
