Japan core inflation rate Year-on-year growth rose to 3% in December, a 16-month high, strengthening the case for the Bank of Japan to raise interest rates.

That was in line with inflation expectations of economists polled by Reuters and higher than November’s 2.7% price growth rate.

The December data means the country’s core inflation has been at or above the Bank of Japan’s 2% target for the 33rd consecutive month. The core inflation data excludes only fresh food prices but includes energy.

Japan’s overall inflation rate was 3.6%, up sharply from 2.9% in November and reaching the highest level since January 2023.

The data comes as the Bank of Japan’s policy meeting is set to end today. Strong inflation data gives the Bank of Japan more room to raise interest rates.

The so-called “core-to-core” inflation rate tracked by the Bank of Japan, which excludes fresh food and energy prices, was steady at 2.4%.

Immediately after the data was released, the yen weakened slightly against the US dollar, to 156.1.