Japan inflation eases in welcome news for PM Takaichi

TOKYO, Feb 20 (AFP): Japanese inflation slowed in January, government data showed Friday, in welcome news for Prime Minister Sanae Takaichi after her recent election landslide win.
Soaring inflation in Asia's number-two economy -- after decades of flat or falling prices -- contributed to the downfall of Takaichi's two predecessors and Japan's first woman premier has made helping households a priority.
Excluding fresh food, "core" consumer prices rose 2.0 percent year-on-year, the slowest rise in two years, down from 2.4 percent in December, and in line with market forecasts.
Also stripping out energy prices, inflation mellowed to 2.6 percent from 2.9 percent, while headline unadjusted inflation was 1.5 percent, down from 2.1 percent.
Petrol prices fell 14.6 percent, thanks in part to government subsidies, but food excluding fresh produce rose 6.2 percent. Rice prices -- which doubled last year -- soared 27.9 percent.
"Looking ahead, we expect headline inflation to weaken further to just over 1 percent in February and March as generous energy subsidies kick in," said Abhijit Surya at Capital Economics.
He added that with price pressures easing, the Bank of Japan "won't be in a rush" to hike interest rates but will still do so by mid-year.
Takaichi was due to give a policy address in parliament later on Friday after winning a historic two-thirds majority in February 8 snap elections.
Apoll by the Yomiuri newspaper published Friday put support for Takaichi's cabinet at 73 percent, up six percentage points and her highest yet.
In the address, Takaichi will likely repeat her campaign pledge to suspend consumption tax on food for two years to help households cope with inflation.
This has exacerbated market worries about Japan's Godzilla-sized debts, with yields on long-dated government bonds hitting record highs last month.
To ease such concerns, Takaichi on Wednesday repeated her mantra of having a "responsible, proactive" fiscal policy and promised to reduce debt.
She will also announce in her policy speech a cross-party "national council" to discuss taxation and how to fund ageing Japan's ballooning social security bill, media reports said.
But Takaichi's first order of business will be obtaining approval for Japan's budget for the fiscal year beginning on April 1 after the process was delayed by the election.