Tokyo CPI Accelerates 2.7%, BOJ Hikes Likely

Tokyo CPI Accelerates 2.7%, BOJ Hikes Likely

Tokyo’s core consumer price index (CPI), which excludes fresh food, rose 2.7% year‑on‑year in September, accelerating from 1.8% in August and surpassing economists’ median forecast of 2.4%. The broader Tokyo CPI also increased 2.7% from a year earlier, compared with 1.9% in August. On a month‑on‑month basis, the core CPI rose 0.4% after a 0.7% gain in the previous month.

The data, regarded as a leading indicator of nationwide inflation trends, shows underlying price pressures remain above the Bank of Japan’s (BOJ) 2% target. Following the release, the BOJ had already raised its policy rate to 1.25% in September, the highest level in more than three decades, and indicated that further tightening could be considered if inflation risks persist. Recent internal discussions revealed that some policymakers favour faster rate hikes to prevent inflation from overshooting the target, whereas others caution that aggressive tightening could harm consumption and growth.

The stronger Tokyo inflation reading is expected to keep markets focused on the pace of BOJ tightening and reinforces expectations of additional rate hikes.