Japan’s annual inflation rate eased to 2.3% in October 2024, down from 2.5% in September, marking its lowest level in nearly 10 months. This decline signals a slowdown in price pressures across several sectors, driven by reduced energy costs and slower price increases in household goods and services. Despite the moderation, core inflation remained slightly above market expectations at 2.3%.

Energy Prices Show Significant Decline

A major contributor to the drop in inflation was the slower rise in energy costs. Electricity prices recorded a 4.0% increase in October, a significant drop from the 15.2% jump seen in September, as the effects of the government’s May subsidy removal waned. Similarly, gas prices rose at a slower pace of 3.5%, compared to 7.7% in the previous month. These changes reflect a gradual stabilization in energy markets, offering some relief to Japanese consumers.

Mixed Trends Across Sectors

Other sectors saw varied price movements. Furniture and household goods costs slowed to 4.4%, down from 4.8%, while culture-related expenses eased to 4.3%. Communication and education costs experienced further declines, with communication prices dropping by 3.5%. However, some sectors witnessed slight increases, including food prices, which rose by 3.5%, and housing, up by 0.8%. Transport costs also saw a sharper rise, climbing by 0.5% compared to 0.1% in September.

CPI Reverses Monthly Trend

On a monthly basis, Japan’s consumer price index (CPI) rose by 0.4% in October, reversing the 0.3% decline recorded in September. This uptick reflects stronger price pressures in specific areas, such as healthcare, clothing, and miscellaneous items. Despite the overall slowdown in annual inflation, these sectoral increases suggest that inflationary pressures remain uneven, underscoring the complexity of Japan’s economic recovery.