Japan’s Tokyo CPI data for March showed further easing in inflation, with core CPI (ex-fresh food) slipping from 1.8% yoy to 1.7% yoy, below expectations of 1.8% yoy. The reading marks the lowest level since April 2024 and remains below the Bank of Japan’s 2% target for a second consecutive month.
Underlying inflation also showed signs of moderation, with core-core CPI (ex-fresh food and energy) easing from 2.5% yoy to 2.3% yoy. Headline CPI edged down from 1.5% yoy to 1.4% yoy.
Much of the weakness in headline figures continues to be driven by energy, where prices fell -7.5% yoy following a -9.2% yoy drop in February, largely reflecting government subsidies to curb utility costs. However, the energy picture is becoming more complex. Gasoline prices declined just -1.0% yoy in March, a sharp slowdown from February’s -14.7% yoy drop, as the impact of tax cuts was offset by rising oil prices linked to Middle East tensions.
