Tokyo core inflation rate jumps in September, bolstering case for more BOJ hikes
EWJ•Tokyo core inflation rose 2.7% year over year in September, up from 1.8% in August and above the 2.4% forecast. An index excluding fresh food and fuel climbed 3.0%.
1. Inflation accelerates
Tokyo’s core consumer price index, which excludes fresh food but includes fuel, rose 2.7% in September from a year earlier, its fastest pace in 10 months. The increase exceeded the BOJ’s 2% target for the first time since January and was above the 2.4% market forecast.
2. Broader price pressures
An index excluding fresh food and fuel rose 3.0%, up from 2.0% in August. The increase was partly due to the phasing out of water bill subsidies, while households paid more for food, transportation and hotel bills. Service-sector inflation accelerated to 2.3% from 1.4%.
3. BOJ policy outlook
The data will be among factors the Bank of Japan considers when it issues quarterly inflation forecasts at its October 29-30 policy meeting. Sompo Institute Plus senior economist Masato Koike said he expects the BOJ to raise interest rates in December. The BOJ raised rates to a 31-year high last month, and its governor signalled the bank had entered a phase focused on preventing inflation from overshooting its target.
