In September, Japan's core inflation hit 2.1%, matching economists' forecasts but marking an increase from 1.7% in August. This uptick is attributed to rising import costs linked to a weak yen and the ongoing impact of higher energy prices. Notably, 'core-core' inflation, which excludes fresh food and energy, rose to 2.4%.
Abhijit Surya, a senior economist at Capital Economics, highlighted that despite a slowdown in fresh food inflation, overall goods inflation increased to 2.8%. The rise in inflation may prompt the Bank of Japan to consider another interest rate hike, following a recent increase to 1.25%, as it seeks to normalize monetary policy after years of reflation.
Finance Minister Satsuki Katayama indicated that Japan is nearing a period of sustained inflation, driven by rising wages, while also acknowledging the role of higher import costs. The government is currently debating a bill to reduce the consumption tax on food, which could impact the central bank's inflation management strategies