Core consumer prices in Tokyo rose 2.3 percent year-on-year in December, slowing from 2.8 percent in November but staying above the Bank of Japan's 2 percent target. The figure fell short of market expectations of 2.5 percent, triggering yen weakness. As a leading indicator for nationwide trends, the data will factor into the BOJ's next policy meeting.
Core consumer prices in Tokyo, excluding fresh food, rose 2.3 percent in December 2025 from a year earlier, according to data released by Japan's Ministry of Internal Affairs and Communications on Friday. This marked a slowdown from November's 2.8 percent increase, primarily due to a decline in utility bills, and fell short of the median market forecast of 2.5 percent.
A core-core index, which strips out both fresh food and energy costs and is closely monitored by the Bank of Japan for underlying demand-driven inflation, climbed 2.6 percent in December, down slightly from 2.8 percent in November. The overall consumer price index also decelerated sharply to 2.0 percent from 2.7 percent the previous month.
The slowdown reflects the end of energy subsidies from the previous year and is the first deceleration since August. Following the release, the yen weakened to as low as 156.49 per dollar, from around 155.80 beforehand.
Building on the recent BOJ rate hike to a 30-year high of 0.75 percent covered previously, analysts note that yen depreciation could fuel inflation via higher import costs—a concern raised by some BOJ board members at last week's meeting. Governor Kazuo Ueda has indicated readiness for further hikes if economic conditions and wage growth remain solid.
The BOJ will review this data at its January 22-23 policy meeting, where it will update quarterly growth and inflation projections. Tokyo's figures serve as a key leading indicator for national inflation trends.
