The core consumer price index for Tokyo, which excludes fresh food prices, rose 2.7% year-on-year in September, the highest in 10 months and above the forecast of 2.4%, accelerating from 1.8% in August. The figure exceeded the Bank of Japan's 2% target for the first time since January and was the fastest annual pace since November, when it stood at 2.8%. Meanwhile, the core-core CPI, which excludes both fresh food and energy prices and is closely watched by the Bank of Japan, rose 3.0% in September from 2.0% in August, the fastest since August 2025. The increase was driven in part by the gradual phasing out of subsidies for water and childcare costs, as well as higher prices for food, travel, hotels, and personal computers and tablets tracking chip prices. Although investors have scaled back expectations that the BOJ will raise rates at consecutive meetings this month, most of the market still expects the BOJ to lift its policy rate in December. The data is one of the factors the BOJ will use to revise its quarterly inflation projections at its monetary policy meeting on October 29-30. An analyst at Dai-ichi Life Research Institute said that even after stripping out temporary factors, the inflation figures remain strong, reflecting that businesses are beginning to pass on higher costs stemming from the weak yen and the Iran war, and that nationwide core inflation is likely to top 3% in the coming months, which would pressure the BOJ to raise rates again as early as December.
Tokyo core inflation at 2.7% beats forecasts, bolstering BOJ rate-hike expectations which strengthens the yen.
