Japan's Inflation Eases to 3.7% in February, but Household Costs Remain High

The Bank of Japan holds steady on interest rates as wage growth and government subsidies shape the economic outlook.

Headline inflation in Japan slowed to 3.7% in February 2025, down from a two-year high of 4% in January, but remains above the Bank of Japan's 2% target.
Core inflation, excluding fresh food, dropped to 3%, while 'core-core' inflation, which excludes fresh food and energy, rose slightly to 2.6%.
Government subsidies for electricity and gas fees contributed to the easing of inflation, though rising prices for essentials like food and accommodation continue to strain households.
Japan's largest labor union secured a historic 5.46% wage increase for 2025, the highest in over three decades, potentially influencing future inflation trends.
The Japanese government auctioned emergency rice stockpiles to combat surging prices caused by supply chain disruptions and poor agricultural output.