Price growth in Japan’s capital showed fresh signs of cooling in January, offering households some relief from higher living costs, while underlying inflation measures suggested momentum toward the Bank of Japan’s price target remains intact.

Data released Friday showed Tokyo’s core consumer price index (CPI), which excludes volatile fresh food prices, rose 2.0% from a year earlier. The reading marked a slowdown from December’s 2.3% increase and came in below the market median forecast of 2.2%, making it the weakest annual gain in 15 months.

The moderation was driven largely by temporary factors, including the lingering effects of government gasoline subsidies and base effects from last year’s sharp food price increases. These elements helped dampen headline inflation, easing pressure on consumers after a prolonged period of rising costs.

A broader measure watched closely by policymakers, however, pointed to more persistent price dynamics. An index excluding both fresh food and fuel costs rose 2.4% in January, down slightly from 2.6% in December but still comfortably above the BOJ’s 2% inflation target. This gauge is widely seen as a better indicator of demand-driven inflation trends.

The figures align with the central bank’s view that inflation may dip temporarily below target as food price increases fade, before re-accelerating later in the year as wage growth strengthens household purchasing power.

Economists said the January slowdown is unlikely to alter the BOJ’s policy trajectory. “The easing in core inflation is mainly due to one-off factors,” said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute. He noted that while fuel subsidies could push inflation below 2% in coming months, attention will turn to whether companies raise prices again to offset higher import costs stemming from the weak yen.

Shinke added that the BOJ could consider another rate hike as early as April if currency weakness encourages firms to implement price increases at the start of Japan’s new fiscal year.

Separate data released the same day showed factory output slipped 0.1% in December from the previous month, a smaller decline than the 0.4% drop expected by economists. Manufacturers surveyed by the government forecast a sharp rebound in January, followed by a pullback in February.

The BOJ raised interest rates to 0.75% in December, the highest level in three decades, underscoring its confidence that Japan is moving toward sustainably achieving its inflation goal after years of ultra-loose monetary policy. Policymakers reiterated a hawkish stance last week, highlighting risks posed by yen weakness and signaling readiness to continue tightening despite political sensitivities.