Japan Core Inflation Hits 2.1%, Supporting BOJ Hikes

Japan’s core consumer inflation accelerated to 2.1% year over year in September, up from 1.7% in August and back above the Bank of Japan’s 2% target. Rising food and energy costs, a weak yen that has made imports more expensive, and broader cost pressures contributed to the increase, while government subsidies helped limit the impact of energy prices. Measures excluding both fresh food and energy also rose, suggesting price pressures may extend beyond volatile commodities. The data strengthen expectations that the Bank of Japan could raise rates again, though policymakers are widely expected to hold rates at their October meeting while updating inflation forecasts and keeping further hikes under consideration.