Macro
Japan's core inflation climbs to 2.1% in September, back above the BOJ's 2% target for the first time since December
A sharper rise in prices excluding fresh food and energy, up to 2.4%, lands a week before the Bank of Japan's October 29-30 policy meeting.
HedgeWeekly News Desk ·
Japan's nationwide core consumer prices, which exclude fresh food but include energy, rose 2.1% in September from a year earlier, government data released at 8:30 a.m. Tokyo time on Friday showed. That is up from 1.7% in August and matches the median forecast in a Reuters poll of 15 economists.
The reading takes core inflation back above the Bank of Japan's 2% target for the first time since December. August had marked a seventh straight month below the goal, a stretch in which government energy subsidies held down household bills; electricity prices fell 2.4% year on year that month. Headline inflation rose to 2.1% from 1.9%.
The bigger move came in the measure that strips out both fresh food and energy, which climbed to 2.4% from 1.9%. Economists had flagged ahead of the release that higher energy costs linked to the Middle East conflict were filtering through to households, while wholesale prices rose 6.8% year on year in September. The yen firmed after the data, with the dollar at 156.55 yen shortly after the release, according to FXStreet.
Why it matters: the jump in the ex-food-and-energy gauge suggests price pressure is broadening rather than resting on fuel alone, which strengthens the case the BOJ has been building for further tightening. Policymakers meet on October 29-30, and Reuters has reported the bank may say underlying inflation has roughly reached its target and signal readiness to raise rates in the coming months, although many board members are wary of moving at this meeting. For funds positioned in the yen or Japanese government bonds, the tone of that statement and next week's Tokyo CPI are the next tests.