Tokyo core inflation jumps in September, bolstering case for more BOJ hikes
TLT•Tokyo core inflation rose 2.7% year over year in September, above the 2.4% forecast and up from 1.8% in August. An index excluding fresh food and fuel increased 3.0%, as the data added to expectations of further Bank of Japan rate hikes.
1. Inflation accelerates
Tokyo’s core consumer price index, which includes fuel but excludes fresh food, rose 2.7% in September from a year earlier, its fastest annual pace since November and above the BOJ’s 2% target for the first time since January. An index excluding fresh food and fuel rose 3.0%, its fastest annual increase since August 2025.
2. Prices rise broadly
The increase was partly due to the end of water-bill and childcare subsidies, while prices also rose for a broad range of food and daily necessities as raw-material costs increased. Personal computers and tablets became more expensive amid a spike in chip prices, and service-sector inflation accelerated to 2.3% from 1.4% in August.
3. BOJ weighs next steps
The data will be among factors the Bank of Japan considers when it updates its quarterly inflation forecasts at its October 29-30 meeting. Market participants have reduced bets on a rate hike this month, while many expect a December increase; analysts cited rising costs and inflation risks as factors in that outlook.
