Why it matters
- Tokyo's figures arrive weeks before national data and are watched as an early signal.
- Faster inflation makes it more likely the Bank of Japan raises rates again.
- Higher Japanese rates could eventually support the weak yen.
Consumer prices in Tokyo rose faster than expected in September, strengthening the case for the Bank of Japan to keep raising interest rates.
Core consumer prices in the capital, which exclude fresh food, rose 2.7% from a year earlier, Newsquawk reported. Economists had expected 2.4%, and the rate in August was 1.8%.
| Measure | September | Forecast | August |
|---|---|---|---|
| Core (excludes fresh food) | 2.7% | 2.4% | 1.8% |
| Excludes fresh food and energy | 3.0% | 2.5% | — |
| Headline | 2.7% | 2.5% | — |
The core reading was above the Bank of Japan's 2% target for the first time in nine months, according to Trading Economics.
What it means for the Bank of Japan
Tokyo's inflation data is published weeks before the national figures, so investors use it as an early guide. The Bank of Japan raised its short-term rate to 1.25% on Sept. 18, the highest since 1995, in a 7–2 vote, according to Trading Economics. A faster rise in prices gives policymakers more reason to move again.
Stocks in Tokyo fell on the day. The Nikkei 225 closed 0.94% lower at 68,309 as investors took profits after Thursday's 3.3% gain, Trading Economics reported. The yen traded near 158 per dollar this week.
Sources
- Newsquawk, Japanese Tokyo core CPI, September
- Trading Economics, Japan stock market
- Trading Economics, Japan interest rate
