First time in four months, waiting for Bank of Japan decision
The rise in energy costs pushes inflation in Japan for the first time in four months, remaining steadily above the 2% target set by the Bank of Japan (Boj). Based on data released by the Ministry of Internal Affairs, in September the consumer price index increased by 2.9%, marking an acceleration compared to +2.7% in August. The “core” index which excludes both energy and fresh food, and is considered a more reliable indicator, grew by 3% compared to the previous year, after +3.3% in August. Among the components, energy prices recorded an increase of 2.3%, reversing the 3.3% decline of the previous month, while those of food, excluding fresh products, rose by 7.6%, slightly less than the 8.% of August. The September figure represents the first increase in core inflation after four months of slowdown, and consolidates the exceeding of the 2% threshold maintained uninterruptedly since April 2022. The price trend will be one of the main elements at the center of the two-day Boj meeting scheduled for next week, during which the board will discuss whether to keep the reference interest rate unchanged at 0.5%, and will publish the new quarterly forecasts on growth and inflation. After the gradual exit last year from a decade of ultra-expansionary monetary policy and the subsequent rate increase in January, the Boj continues to move cautiously. Governor Kazuo Ueda reiterated the need to proceed gradually, in light of the uncertainties caused by US tariffs and the repercussions on global trade.
