Japan's core consumer price index, which strips out one-off factors, rose 3.2% in September, the fastest annual pace in three years. The data comes ahead of the Bank of Japan's policy meeting, which ends on Friday. Reuters reports the reading cements the case for further rate hikes.
The Bank of Japan's gauge of underlying inflation jumped 3.2% in September from a year earlier, accelerating from 2.6% in August. It is the biggest year-on-year rise since October 2023, a sign of broadening price pressures that cement the case for further interest rate hikes.
BOJ set to hold at 1.25% on Friday
A two-day BOJ policy meeting ends on Friday. The central bank is set to keep rates steady at 1.25% but signal its readiness to keep raising borrowing costs on mounting risks of inflation.
Compiled by the BOJ, the index gauges price moves driven by domestic demand. It excludes institutional factors such as education and energy-related subsidies. The government's core CPI differs: it excludes volatile fresh food costs but does not strip out the impact of subsidies and other government steps.
Service-sector prices rise 3.7%
Separate BOJ data showed a key gauge of service-sector inflation rose 3.7% in September from a year earlier. That suggests companies are passing rising labour costs on to service-related prices.
Dai-ichi Life Research Institute economist Kenichiro Ahara said the data reflects this year's wage negotiations. According to Ahara, "companies are passing on prices at the business-to-business level".
The services producer price index followed a revised 3.5% gain in August. A 97.7% jump in ocean freight transport costs was among the key drivers, as the weak yen and Middle East conflict boosted the cost of importing fuel.
Prices of labour-incentive sectors continued to rise steadily, analysts said. The BOJ has said it focuses on underlying inflation in deciding the pace and timing of future rate hikes.
Source: Investing.com
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