Japan core inflation exceeds BOJ target, cements near-term rate hike chance
TLT•Japan’s core consumer inflation rose 2.1% year over year in September, above the Bank of Japan’s 2% target for the first time in nine months. A measure excluding fresh food and fuel rose 2.4%, as broadening price pressures offset fuel subsidies.
1. Inflation moves above target
Japan’s core consumer price index, which excludes fresh food but includes fuel, rose 2.1% in September from a year earlier, matching the median market forecast and up from 1.7% in August. An index excluding both fresh food and fuel increased 2.4%, compared with 1.9% in August.
2. Rate outlook and price pressures
Higher fuel costs linked to the prolonged Middle East conflict, elevated import prices driven by the weak yen and price pressures from brisk AI demand were blunting the effect of government fuel subsidies. The Bank of Japan raised its key rate to 1.25% last month. It is set to hold policy next week but may revise up its inflation forecast and signal readiness for further rate increases, sources told Reuters.
