Tokyo Inflation Decelerates, Aligning with Bank of Japan's Cooling View

According to Yahoo News, inflation in Tokyo has slowed to its lowest pace in over a year, aligning with the Bank of Japan's (BOJ) perspective that price pressures are cooling and supporting its cautious stance on reducing stimulus. Consumer prices, excluding fresh food, increased by 2.3% in November compared to the previous year, primarily due to weaker electricity, gas, and processed food prices. This is a deceleration from the 2.7% inflation rate in October and falls below economists' forecast of 2.4%. Tokyo's figures serve as a leading indicator of the national trend, suggesting that Japan's price growth also moderated last month. The data supports BOJ Governor Kazuo Ueda's view that prices will cool after an unexpected acceleration in the previous month. This slowdown may encourage the central bank to wait for other signs that its wage-gain-accompanied inflation target will be achieved, reducing market speculation about an early policy shift. A deeper measure of the inflation trend, which excludes fresh food and energy prices, also decelerated to 3.6%, slowing steadily for the third consecutive month. In the latest outlook report released in October, the BOJ revised up its projection for its key inflation gauge for the current and next fiscal years to 2.8%, indicating three consecutive years of price increases exceeding the 2% target. However, the bank set its price forecast for the fiscal year 2025 at 1.7%, implying that current levels of inflation will not last indefinitely.