The core measure excludes fresh food prices but includes energy, making it one of the most closely watched gauges of underlying inflation trends.
Headline inflation was little changed, with overall CPI rising 2.9% year-on-year, underscoring persistent price pressures across the economy despite recent volatility in energy markets and a modest slowdown in global growth momentum.
A broader measure of underlying inflation, which excludes both fresh food and energy prices, also rose 3.0% from a year earlier. The strength of this “core-core” gauge suggests inflation is no longer being driven solely by imported cost pressures, but is increasingly supported by domestic factors such as services prices, labour costs and corporate pricing behaviour.
The November data reinforces the view that Japan’s inflation backdrop remains fundamentally different from the deflationary environment that characterised much of the past two decades. While policymakers continue to stress the need for sustainable, demand-driven inflation, recent readings point to a more persistent trend than initially expected.
From a policy perspective, the inflation figures strengthen the case for the Bank of Japan’s expected rate hike, which would take its policy rate to the highest level in roughly three decades. However, officials are likely to maintain a cautious tone, mindful of the recent rise in Japanese government bond yields and the sensitivity of financial conditions to further tightening.
For markets, the data is broadly in line with expectations and therefore unlikely to trigger significant volatility on its own. Instead, attention is expected to remain focused on the BoJ’s policy guidance and Governor Kazuo Ueda’s assessment of whether current inflation dynamics are sufficiently durable to justify further rate increases over time
