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Japan’s inflation rate in February slowed from a 41-year high in January

Japan’s inflation rate in February slowed from a 41-year high in January, according to data released by the Ministry of Internal Affairs and Communications. The core consumer price index (core-CPI), which excludes raw food prices but includes oil prices, rose 3.1% in February year on year, compared to 4.2% in January, the highest level seen in 41 years.

Despite the slowdown, the core CPI remains above the Bank of Japan’s (BOJ) inflation target of 2% for the 11th consecutive month, which could pressure the BOJ to consider abandoning its ultraloose monetary easing policy under the administration of the new BOJ governor, who is set to take office in April.

The ministry noted that core CPI slowed for the first time in 13 months due to the impact of the Japanese government’s subsidy policy aimed at reducing utility spending. If not for this effect, the core CPI index in February was expected to expand at 4.2%, the same rate as in January.

The report also highlighted that food prices surged by 7.8% in February, the fastest pace seen in nearly 47 years. Higher raw material and transportation costs led to a widespread rise in food products, from hamburgers to chocolate, and egg prices surged by 19.9% due to concerns over supply caused by an avian influenza outbreak.

Overall, the data suggests that inflationary pressures are still present in the Japanese economy, although the impact of government policies and supply chain disruptions have had an impact on the rate of increase.

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