Japanese Inflation Slows in January as PM Takaichi Plans Policy Moves

Japan’s inflation eased in January, government data showed Friday, offering relief to Prime Minister Sanae Takaichi after her recent election landslide.

Excluding fresh food, core consumer prices rose 2.0% year-on-year, the slowest in two years, down from 2.4% in December, meeting market expectations. Excluding energy prices, inflation fell to 2.6% from 2.9%, while headline inflation dropped to 1.5% from 2.1%.

Petrol prices fell 14.6%, aided by government subsidies, but food excluding fresh produce rose 6.2%, with rice prices jumping 27.9%.

Economist Abhijit Surya of Capital Economics said, “Headline inflation may drop to just over 1% in February and March as energy subsidies take effect. The Bank of Japan will not rush rate hikes but may act by mid-year.”

Takaichi, Japan’s first woman premier, is set to give a policy address Friday. She won a historic two-thirds majority in the February 8 snap election, and a Yomiuri newspaper poll shows her cabinet support at 73%, her highest yet.

She is expected to reiterate her pledge to suspend the consumption tax on food for two years to ease household burdens.

Facing concerns over Japan’s massive debt, Takaichi emphasized a “responsible, proactive” fiscal policy and plans to form a cross-party national council to review taxation and fund the ageing population’s social security needs.

Her first priority will be approval of the FY2026 budget, delayed by the election.

Takaichi is also expected to update Japan’s Free and Open Indo-Pacific (FOIP) strategy, focusing on resilient supply chains, maritime security, and regional defense amid rising tensions with China.

Foreign Minister Toshimitsu Motegi said, “The international situation around Japan is increasingly severe. New challenges in economic security and technology competition have emerged.”

Takaichi previously suggested Japan could intervene militarily if China attempted to take Taiwan by force. Beijing has criticized these remarks, with diplomat Wang Yi accusing Japan of trying to “revive militarism.”

The premier will also propose a new National Intelligence Agency to consolidate government intelligence, alongside a planned “spy prevention” law. Editorials caution that the agency must protect citizens’ rights while addressing security threats.