Japan’s core inflation dips to 2.7%, lowest since November 2024

Japan’s core inflation rate just fell to 2.7% in August, the lowest since November 2024, according to ￰0￱ drop makes it the third straight month prices have cooled, and both headline and core inflation are now sitting at that same ￰1￱ inflation, for the record, leaves out the price of fresh food, not because anyone stopped eating, but because it moves too much to be useful for month-to-month ￰2￱ headline number also came down, falling from 3.1% in July to 2.7% in August, hitting another low not seen since late last ￰3￱ “core-core” inflation rate , the one Bank of Japan actually watches when making policy calls, also ticked down — now at 3.3%, after hitting 3.4% in ￰4￱ version takes out both fresh food and ￰5￱ if you want to know why this number matters, it’s because it’s the only one they trust to track long-term trends, not just short-term swings.

Still, these aren’t big drops. They’re just ￰6￱ of Japan holds rates as GDP rises and rice prices slow Rice prices, one of the weirdest but strongest parts of Japan’s inflation problem, finally cooled down a ￰7￱ August, rice inflation was 69.7%, way down from 90.7% in July, but still ridiculously ￰8￱ are still paying more for ￰9￱ one’s ￰10￱ the rate’s drop gave the central bank a little ￰11￱ Bank of Japan is making its next rate decision today, and economists in that Reuters survey expect the bank to keep its benchmark policy rate at 0.5%. But some are already calling for ￰12￱ analysts, in a note sent out on September 12, said they think the central bank might raise rates by 25 basis points when they meet again in ￰13￱ reason?

“We believe that the second quarter GDP print, which outperformed market expectations, certainly delivered,” they wrote. They’re referring to Japan’s Q2 GDP, which came in at 0.3% growth quarter-on-quarter, better than the 0.1% expected, and a step up from the revised 0.1% in ￰14￱ main thing behind it? ￰15￱ Japanese economy hasn’t exactly been exploding, but it’s showing signs of resilience, and that’s enough for some to think a hike could be coming ￰16￱ deal with Trump gives exports relief, Kono pressures BOJ A deal Tokyo reached with Washington in late July gave exporters some breathing ￰17￱ ￰18￱ to cut tariffs on Japanese goods to 15%, down from the 25% Donald Trump threatened earlier this year in his “tariff letter.” That deal eased fears in Tokyo, but it didn’t remove all ￰19￱ pointed out that if global trade slows, Japan’s exporters could still feel the pain.

Meanwhile, the pressure is rising inside the country ￰20￱ Kono, a senior member of the ruling Liberal Democratic Party, said on September 9 that the BOJ better act fast or prices will keep going up. “If the Bank of Japan delays a rate increase, I think it would mean inflation will continue and everything we import would be higher,” Kono ￰21￱ aren’t sitting still ￰22￱ Nikkei 225 rose 1.19% on Thursday, hitting a record high for the second straight ￰23￱ Topix index also gained 0.84%. Investors are watching the BOJ closely, betting that today’s move — or lack of one — won’t be the ￰24￱ in the bond market, Japan’s 2-year government bond yield climbed to 0.885%, the highest level since June 2008, based on LSEG ￰25￱ are clearly pricing in a future rate ￰26￱ markets in Asia moved too.

Australia’s ASX/S&P 200 jumped 0.77%. South Korea’s Kospi and Kosdaq were flat at the ￰27￱ Kong’s Hang Seng Index dropped 0.4%, and China’s CSI 300 rose 0.13%. Then there’s the wider regional ￰28￱ Federal Reserve just cut interest rates by 0.25 percentage points on Wednesday and signaled there could be more cuts ￰29￱ move has opened the door for other Asian central banks to follow suit — or get ahead of it. A few already ￰30￱ Bank of Korea dropped its rate to a three-year low back in May.

Australia’s central bank slashed its rate to a two-year low in ￰31￱ India’s central bank cut by 50 basis points in ￰32￱ this matters because economies like Japan, South Korea, and Singapore still rely heavily on ￰33￱ despite all the inflation and trade chaos, those three still managed to post better-than-expected GDP growth in ￰34￱ and Singapore even narrowly dodged technical recessions. Don’t just read crypto ￰35￱ ￰36￱ to our newsletter. It's free .