Data released on Wednesday morning by the Bank of Japan showed that the country's core inflation rate has exceeded expectations and accelerated in January, reaching its highest level in 10 months. According to the data, the core Consumer Price Index (CPI) published by the Bank of Japan registered a year-on-year growth of 2.2% in January, which was higher than market expectations that suggested a rise in the core inflation rate to 2%. The previous reading for the core inflation rate from the Bank of Japan was 1.9% in December. It is noteworthy that the Bank of Japan's core inflation index measures the change in prices of goods and services purchased by consumers, excluding food and energy. Prices for food and energy account for about a quarter of the overall Consumer Price Index but tend to be very volatile, which can disrupt the underlying trend of inflation. The Bank of Japan typically places greater importance on core inflation data, as do traders, since this impacts the Bank's monetary policy decisions, which in turn affects the movements of the Japanese yen.
