14 March 2025 | Other

Reuters poll of analysts pointed to possible deceleration of Japan's inflation in February

Reuters poll of analysts pointed to possible deceleration of Japan's inflation in February

Japan's core inflation in February likely slowed from 3.2% in January to 2.9% due to renewed energy subsidies, according to a poll of economists conducted by Reuters. Meanwhile, overall price dynamics are expected to support the central bank's intent to hike rates later this year.

According to analysts at SMBC Nikko Securities, despite the expected acceleration in petroleum product prices, the impact of subsidies on electricity and gas utility costs will be more pronounced.

A separate index that excludes the impact of the fresh food and fuel costs was expected to remain at the January level of 2.5% in February as well, according to Ryosuke Katagi, market economist at Mizuho Securities. The index, as a broader measure of price dynamics, is closely watched by the Bank of Japan (BOJ).

The agency estimates that such price trends reinforce the BOJ's determination to keep raising rates. Market expectations mainly assume their increase to take place in the third quarter. The discussion of further steps in Japan's monetary policy will also be largely determined by US President Donald Trump's economic policy and its global impact.

Anton Volkov MarketCheese
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