▶️ JUST IN: Japan's core inflation just climbed back above the Bank of Japan's 2% target, the first time in nine months.
Core CPI, which excludes fresh food, rose 2.1% in September from 1.7% in August, matching forecasts. Headline inflation also hit 2.1%. The measure the BOJ watches most closely, which strips out both fresh food and fuel, jumped to 2.4% from 1.9%, topping forecasts and signaling that demand-driven price pressure is broadening.
It's a striking turn for a country that spent roughly 15 years in deflation, from the mid-1990s to the early 2020s, per the chart. Headline inflation then ran above 2% for four straight years from 2022 to 2025, its longest streak since 1982.
Several forces are pushing prices up. Higher fuel costs from the Middle East conflict, elevated import prices from a weak yen and strong AI-related demand are all offsetting government fuel subsidies. Goods inflation rose to 2.8% and services to 1.5%.
The BOJ has hiked rates by 50 basis points this year to 1.25%, the highest level in 31 years. Analysts expect it to hold at its October 30 meeting, possibly raising its inflation forecast, with the next hike widely expected in December. Some now flag the risk of a terminal rate higher than previously assumed.
Not everyone is ready to declare victory, though. Economy Minister Minoru Kiuchi said the government has not officially declared an end to deflation, and the yen firmed on the data.
#Japan #Inflation #BOJ #Yen #Economy
Core CPI, which excludes fresh food, rose 2.1% in September from 1.7% in August, matching forecasts. Headline inflation also hit 2.1%. The measure the BOJ watches most closely, which strips out both fresh food and fuel, jumped to 2.4% from 1.9%, topping forecasts and signaling that demand-driven price pressure is broadening.
It's a striking turn for a country that spent roughly 15 years in deflation, from the mid-1990s to the early 2020s, per the chart. Headline inflation then ran above 2% for four straight years from 2022 to 2025, its longest streak since 1982.
Several forces are pushing prices up. Higher fuel costs from the Middle East conflict, elevated import prices from a weak yen and strong AI-related demand are all offsetting government fuel subsidies. Goods inflation rose to 2.8% and services to 1.5%.
The BOJ has hiked rates by 50 basis points this year to 1.25%, the highest level in 31 years. Analysts expect it to hold at its October 30 meeting, possibly raising its inflation forecast, with the next hike widely expected in December. Some now flag the risk of a terminal rate higher than previously assumed.
Not everyone is ready to declare victory, though. Economy Minister Minoru Kiuchi said the government has not officially declared an end to deflation, and the yen firmed on the data.
#Japan #Inflation #BOJ #Yen #Economy