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[BUSINESS] · Japan · 15 sources

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Japan core inflation rises to 2.1% in September

Japan's core consumer inflation rose to 2.1% year-on-year in September, exceeding the Bank of Japan's 2% target for the first time since December. This acceleration from 1.7% in August suggests broadening price pressures across the economy.

A narrower gauge of inflation, which excludes both fresh food and energy, rose to 2.4% in September, up from 1.9% in August. This indicates that underlying demand and cost pressures are strengthening. Key drivers included rising costs for goods, services, and utilities, as well as increased demand related to artificial intelligence.

While government subsidies for electricity and gasoline helped mitigate some upward pressure, other factors such as a weak yen and high import costs—exacerbated by geopolitical tensions in the Middle East—have contributed to the rise. Despite a 20.6% drop in rice prices, inflation across other sectors like processed foods and household durable goods remained elevated.

The data increases market expectations for potential interest rate hikes by the Bank of Japan. While the central bank is expected to maintain its current policy during its upcoming meeting on October 29-30, analysts suggest a further rate increase could occur as early as December.

Entities

Bank of Japan · Euro · Japan · Japanese yen · Kazuo Ueda · Ministry of Internal Affairs and Communications · Minoru Kiuchi · US dollar

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