Japan's nationwide core consumer price index (CPI) recently surpassed market expectations, which had forecasted a 2.6% gain.

In November 2024, Japan's core inflation rose to 2.7%, up from 2.3% in October, largely driven by increasing food and fuel costs.

This rise in inflation has been attributed to persistently high rice prices and the conclusion of government subsidies for utility bills.

An alternative inflation index, which excludes fresh food and fuel prices, showed a 2.4% increase in November compared to the previous year, following a 2.3% rise in October.

As inflation continues to rise, the Bank of Japan (BOJ) faces pressure to consider raising interest rates from the current level of 0.25%.

BOJ Governor Kazuo Ueda has indicated that the bank is prepared to raise rates again if progress towards the inflation target continues, supported by domestic demand and wage growth.

Earlier this year, the BOJ had ended negative interest rates in March and subsequently raised the short-term policy rate to 0.25% in July, aiming for a sustainable 2% inflation.