© Reuters.
biedexmarkets.com–Consumer price index inflation in Japan’s capital rebounded from 22-month lows in February, increasing the prospect of sticky inflation in the country and putting any potential rate hikes from the Bank of Japan squarely in focus.
, which excludes volatile fresh food prices, grew 2.5% year-on-year in February, data from the Statistics Bureau showed on Tuesday. The reading was in line with expectations and rebounded sharply from the 1.6% seen in January, which was its weakest reading in 22 months.
grew 2.6% year-on-year in February, also rebounding from the 1.6% seen in the prior month. Food prices continued to grow steadily, and remained a key driver of inflation.
A core reading that excludes both energy and fresh food, and is used as a key indicator of underlying inflation by the BOJ, still fell to 3.1% from 3.3% in the prior month, but remained well above the BOJ’s 2% annual target.
Tokyo inflation is usually treated as a bellwether for nationwide , with February’s reading now heralding a pick-up in overall inflation.
Tuesday’s reading comes amid growing expectations that the BOJ will begin raising interest rates from negative levels by as soon as April.
Sticky inflation gives the central bank more impetus to end its ultra-loose policies, although the bank has signaled that any increases in interest rates will be largely staggered.
