Japan Core Inflation Accelerates to 1.8%, Boosts Rate Hike Expectations

Japan's core consumer inflation accelerated in July, rising to 1.8% from a year earlier as companies increased prices due to higher import costs caused by a weak yen and the US-Israeli conflict.

The data, released on Friday, is one of several factors that will be considered by the Bank of Japan at its next policy meeting on September 17 and 18, when it is widely expected to raise interest rates from 1%.

This would mark a significant increase for the BOJ, which has kept rates low for years to combat deflation and stimulate economic growth. However, with core inflation now above 1.6%, which was seen in June, policymakers may feel pressure to act sooner rather than later.

The core consumer price index (CPI), which excludes volatile fresh food prices, has been below the BOJ's 2% target for seven consecutive months, mainly due to government subsidies aimed at reducing fuel costs.