Wednesday, November 30

Japan’s consumer inflation hits 8-year high, stays above BOJ target

Article content

TOKYO — Japan’s core consumer prices rose 3.0% in September from a year earlier, data showed on Friday, marking the fastest pace in eight years and exceeding the central bank’s 2% target for the sixth straight month.

The data underscores broadening price pressure in Japan as companies continue to pass on rising import costs blamed in part on the yen’s slump. Those pressures have kept alive market speculation of a future tweak to the Bank of Japan’s ultra-low interest rate policy.

Article content

The increase in the nationwide core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, matched a median market forecast and followed a 2.8% rise in August.

An index stripping away both fresh food and energy costs, which the BOJ closely watches as a key gauge of the underlying strength of inflation, rose 1.8% in September from a year earlier, accelerating from a 1.6% gain in August.

The inflation data highlights the dilemma the BOJ faces as it tries to underpin a weak economy by maintaining ultra-low interest rates, which in turn are fueling an unwelcome slide in the yen that pushes up import costs.

With Japan’s inflation still modest compared with price rises seen in other major economies, the BOJ has pledged to keep interest rates super-low, remaining an outlier in a global wave of monetary policy tightening.

The BOJ is widely expected to maintain its massive stimulus program at its next policy-setting meeting ending on Oct. 28. (Reporting by Leika Kihara and Takahiko Wada; Editing by Sam Holmes)