TOKYO, Feb 27 (Reuters) - Annual core inflation in Japan's capital slowed in February as food price hikes run their course, data showed on Friday, offering consumers some relief but complicating the central bank's communication in justifying further rate hikes.
The data is in line with the Bank of Japan's projection that consumer inflation will temporarily slow due to the impact of fuel subsidies and the base effect of last year's spike, before reaccelerating on steady wage gains.
The Tokyo core consumer
price index, which excludes volatile costs of fresh food, rose 1.8% in the year to February after a 2.0% gain in January, data showed, falling below the central bank's 2% target for the first time since October 2024. It compared with a median market forecast for a 1.7% gain.
An index stripping away the effect of fresh food and fuel, which is seen as a better gauge of trend inflation, rose 2.5% in February from a year earlier after a 2.4% gain in January.
The BOJ raised interest rates to a 30-year high of 0.75% in December, taking another landmark step in ending decades of huge monetary support in a sign of its conviction that Japan is progressing toward durably hitting its 2% inflation target.
The central bank has signalled its readiness to continue raising interest rates if its economic and price forecasts materialise.
(Reporting by Leika Kihara and Makiko Yamazaki; Editing by Jamie Freed)
