Japan's Ministry of Internal Affairs and Communications released data on Friday showing that due to weakening upward pressure on food and energy prices, inflation in Tokyo has cooled more than market expectations, but this trend is not expected to prevent the Bank of Japan from raising interest rates further. Tokyo's core consumer price index, which excludes fresh food, rose 2.3% year on year in December, a sharp drop from the 2.8% increase in the previous month, while economists had expected this figure to drop to only 2.5%. The overall inflation rate slowed to 2.0% from 2.7% last month, while the core core inflation rate excluding fresh food and energy prices fell to 2.6%. The Tokyo inflation data has always been a leading indicator of inflation trends across Japan. At the time of the release of this data, the market is paying close attention to price trends in Japan to determine the timing of the central bank's next round of policy adjustments. Last week, the Bank of Japan's Monetary Policy Committee passed a full vote to raise the policy interest rate to 0.75%, the highest level since 1995. Despite this sharp drop in inflation data, it is still higher than the Bank of Japan's 2% inflation target, which means that the central bank's path of further policy tightening has not been affected. This result is also basically in line with the central bank's benchmark expectations, that is, upward pressure on prices will gradually ease.

Japan's Ministry of Internal Affairs and Communications released data on Friday showing that due to weakening upward pressure on food and energy prices, inflation in Tokyo has cooled more than market expectations, but this trend is not expected to prevent the Bank of Japan from raising interest rates further. Tokyo's core consumer price index, which excludes fresh food, rose 2.3% year on year in December, a sharp drop from the 2.8% increase in the previous month, while economists had expected this figure to drop to only 2.5%. The overall inflation rate slowed to 2.0% from 2.7% last month, while the core core inflation rate excluding fresh food and energy prices fell to 2.6%. The Tokyo inflation data has always been a leading indicator of inflation trends across Japan. At the time of the release of this data, the market is paying close attention to price trends in Japan to determine the timing of the central bank's next round of policy adjustments. Last week, the Bank of Japan's Monetary Policy Committee passed a full vote to raise the policy interest rate to 0.75%, the highest level since 1995. Despite this sharp drop in inflation data, it is still higher than the Bank of Japan's 2% inflation target, which means that the central bank's path of further policy tightening has not been affected. This result is also basically in line with the central bank's benchmark expectations, that is, upward pressure on prices will gradually ease.