Investing.com-- Japanese consumer inflation rose as expected in September, with core inflation hitting a nine-month high and crossing the Bank of Japan's annual target amid continued pressure from rising energy costs and a soft yen.
Core consumer price index inflation, which excludes volatile fresh food prices, rose 2.1% year-on-year in September, data from the Statistics Bureau showed on Friday.
The print was the strongest reading since December 2025, was in line with expectations, and accelerated from the 1.7% rise seen in the prior month.
A core reading that excludes both fresh food and energy prices jumped to a 10-month high of 2.5% from 2.0% in September. The print is closely watched by the BOJ as a gauge of underlying inflation.
Headline CPI rose 2.1% year-on-year from 1.9% in the prior month.
Inflation was largely broad-based, as rising business costs– due to high energy prices and other global supply chain disruptions– trickled down into consumer prices. Japanese producer inflation hit a 3-½ year high earlier this year.
A soft yen also factored into higher inflation, especially as Japan's import costs increased.
While government subsidies on consumer fuel costs blunted the direct impact of soaring global oil prices, they are expected to still underpin Japanese inflation, especially as businesses pass on higher costs to consumers.
Oil prices hit a five-month high this week on worsening geopolitical conditions in the Middle East. Japan is a major importer of oil and gas, and was especially hit by soaring crude costs.
Friday's data showed core inflation rising past the BOJ's 2% annual target– a trend that is likely to give the central bank more impetus to keep raising interest rates.
"With underlying inflation back above the Bank of Japan's 2% target, the case for further tightening remains on solid ground," Capital Economics analysts said in a note.
"With Governor (Kazuo) Ueda recently warning that underlying inflation is already close to the BoJ's 2% target and that "we cannot tolerate it rising any further", we think the Bank is firmly on track to raise rates further," they said.
The central bank raised rates by a cumulative 50 basis points this year, and has signaled plans for more hikes, especially if inflation continues to tick higher.
Friday's print also furthered expectations that the BOJ will discuss more rate hikes when it meets next week. Recent media reports said the BOJ is preparing to hike its inflation forecasts at its October meeting.
Original Article
Japan CPI inflation hits 9-mth high in Sept, crosses BOJ target
Japan factory activity slows in Oct, services improve, PMI shows
