Japan's Core Inflation Holds Steady Amid Oil Price Pressures

Japan's core consumer inflation is expected to remain steady at 1.8% in August, according to a Reuters poll of 16 economists. This figure remains below the Bank of Japan's (BOJ) 2% target.

The impact of higher oil prices from the Middle East conflict is being offset by government subsidies, particularly for electricity and gas bills. 'Higher crude oil and naphtha prices are increasingly being passed on to consumer prices, especially for daily necessities, which will push inflation upward,' said Ryohei Ikeda, an analyst at Mizuho Research Institute.

The BOJ is expected to hike interest rates to 1.25% at its upcoming meeting, amid concerns over broadening price pressures and yen weakness. Japan's wholesale prices remained elevated in August, rising 7.6% from a year earlier.