Japan’s September inflation data put underlying price growth above the Bank of Japan’s (BOJ) 2% goal again, renewing attention on the central bank’s next policy meeting, scheduled for Oct. 29-30.
The Statistics Bureau of Japan reported that the consumer price index excluding fresh food rose 2.1% from a year earlier, following a 1.7% annual increase in August. Headline inflation was also 2.1%, while the BOJ’s preferred gauge, which also excludes energy, increased 2.4%. CNBC reported that the core reading was the highest so far this year.
Government data pointed to durable goods and public utility charges as sources of upward pressure. Rice prices fell 20.6% year over year, but annual goods inflation accelerated to 2.8% from 2.6% in August. Services inflation also edged up, reaching 1.5% from 1.2%.
CNBC attributed part of the broader price pressure to yen weakness and more expensive imports. Abhijit Surya, senior APAC economist at Capital Economics, said energy costs may still be affecting prices farther along the supply chain. Annual inflation in other industrial products reached 3.9%, a 13-month high. Consumer energy prices fell 0.6% year over year in September; CNBC reported that subsidies from the Takaichi administration helped keep them down despite the Iran conflict.
The BOJ’s September decision raised the overnight call rate by 25 basis points to roughly 1.25%, its highest level in three decades. CNBC described the increases as part of the central bank’s shift away from decades of reflationary policy. Surya expects another rate increase in December.
NHK reported that the Lower House opened debate Tuesday on a proposal to lower the food consumption tax from 8% to 1% for two years. The measure also includes income-based support payments for workers. EconoTimes previously listed the CPI report in its preview of Japan’s September CPI and October PMI. The BOJ’s policy statement is scheduled for Oct. 30.
