Japan core inflation hits 2.1% in September
Tokyo, October 11. Japan's core inflation rate reached 2.1% in September, marking the highest level recorded this year and matching the forecast provided by economists polled by Reuters. The figure represents an acceleration from the 1.7% recorded in the preceding month. Headline inflation also stood at 2.1%, while core-core inflation, a metric preferred by the Bank of Japan that excludes both fresh food and energy prices, climbed to 2.4%. The rise in prices was driven by elevated energy costs and higher import expenses resulting from a weak yen. This inflationary pressure may compel the Bank of Japan to implement another interest rate increase within the year. The central bank recently raised rates by 25 basis points in September, moving the benchmark to a three-decade high of 1.25% as it normalizes monetary policy following decades of reflationary measures. Finance Minister Satsuki Katayama stated to parliament on Wednesday that Japan is on the cusp of entering a period of sustained inflation driven by rising wages. He acknowledged that higher import costs also contribute to price growth, noting that oil import costs have increased as Japan purchases energy from more expensive U.S. sources and shifts away from Middle Eastern suppliers due to the Iranian conflict. Katayama further noted that the weakness of the yen makes oil more costly for Japan. When questioned by a lawmaker about potential conflicts between the government's tax cut plans and the central bank's efforts to combat inflation through interest rate hikes, Katayama told Reuters there is no gap between the views of the government and the Bank of Japan. On Tuesday, Japan's Lower House began debating a bill to reduce the consumption tax on food from 8% to 1% for a two-year period, according to public broadcaster NHK. The proposed legislation also includes provisions for support payments to workers based on their income levels.
Tokyo, October 11. Japan's core inflation rate reached 2.1% in September, marking the highest level recorded this year and matching the forecast provided by economists polled by Reuters. The figure represents an acceleration from the 1.7% recorded in the preceding month. Headline inflation also stood at 2.1%, while core-core inflation, a metric preferred by the Bank of Japan that excludes both fresh food and energy prices, climbed to 2.4%. The rise in prices was driven by elevated energy costs and higher import expenses resulting from a weak yen. This inflationary pressure may compel the Bank of Japan to implement another interest rate increase within the year. The central bank recently raised rates by 25 basis points in September, moving the benchmark to a three-decade high of 1.25% as it normalizes monetary policy following decades of reflationary measures. Finance Minister Satsuki Katayama stated to parliament on Wednesday that Japan is on the cusp of entering a period of sustained inflation driven by rising wages. He acknowledged that higher import costs also contribute to price growth, noting that oil import costs have increased as Japan purchases energy from more expensive U.S. sources and shifts away from Middle Eastern suppliers due to the Iranian conflict. Katayama further noted that the weakness of the yen makes oil more costly for Japan. When questioned by a lawmaker about potential conflicts between the government's tax cut plans and the central bank's efforts to combat inflation through interest rate hikes, Katayama told Reuters there is no gap between the views of the government and the Bank of Japan. On Tuesday, Japan's Lower House began debating a bill to reduce the consumption tax on food from 8% to 1% for a two-year period, according to public broadcaster NHK. The proposed legislation also includes provisions for support payments to workers based on their income levels.