Tokyo’s inflation cooled more than expected as pressures from food and energy prices faded, triggering yen weakness on bets the Bank of Japan may delay the timing of its next interest rate hike.
Consumer prices excluding fresh food in the capital rose 2.3% in December from a year earlier, slowing sharply from 2.8% in the previous month, the Ministry of Internal Affairs and Communications said Friday. The deceleration was the first time since August, and reflected impacts from the end of energy subsidies last year. Economists had expected the reading to slow to 2.5%.
The yen weakened as much as to ¥156.49 per dollar after the release, after trading around ¥155.80 before the data came out. The overall inflation gauge also slowed sharply to 2% from 2.7% in the previous year, while a deeper measure that strips out energy decelerated to 2.6%. Tokyo’s data serves as a leading indicator for nationwide inflation trends.
