Japan's inflation slowed in February, government data showed today, although it could soon rise again as the Middle East war sparks surges in oil prices.
Prime Minister Sanae Takaichi - who was appointed leader in October - has promised to fight inflation as a major priority, with public discontent over rising prices a contributor to the downfall of her two predecessors.
Excluding fresh food, "core" consumer prices rose 1.6% year-on-year, the slowest rise since March 2022, down from 2% in January.
It was a bigger drop than expected, partly thanks to government energy subsidies.
Rice prices rose again in February but at 16.6%, a far lower pace than in previous months.
Overall, consumer price growth including fresh food eased to 1.3% in February from 1.5% in January, with market consensus pegged at 1.5%.
However, Japan's central bank said last week that it expected inflation to increase because of the "recent rise in crude oil prices" caused by the Middle East war.
Stefan Angrick of Moody's Analytics also warned today that "the relief likely won't last".
"Government support was a key factor in February's dip," he wrote in a note.
"But with the conflict in the Middle East scrambling the outlook for commodity prices and growth, a fresh jump in consumer price inflation is a significant risk," he said.
Japan depends on the Middle East for 95% of its oil imports. The government on Thursday began an emergency subsidy programme to drive down the cost of gasoline.
It is hoped the gasoline subsidies will help bring petrol prices to around 170 yen ($1.06) per litre, Chief Cabinet Secretary and top government spokesman Minoru Kihara has said.
The average gasoline price in Japan was hovering just below 160 yen per litre before the war began, according to the Oil Information Center, a Japanese industry research body.
Government officials expect it could take up to two weeks for the gas prices to come down to the target level.
Takaichi said today that Japan would release another part of its strategic oil reserves from Thursday and would tap into joint stockpiles held by producing nations in the country as soon as this month.
The announcement came after Tokyo last week started releasing 15 days' worth of private-sector petroleum reserves.
A joint reserve is held in Japan by Saudi Arabia, the United Arab Emirates and Kuwait, according to the Petroleum Association of Japan.
