Japan Core Inflation Holds Steady at 1.8% Amid Ongoing Price Pressures

Japan's core consumer inflation is expected to have remained steady at 1.8% in August, according to a Reuters poll of 16 economists. This rate matches the previous month and falls short of the Bank of Japan's (BOJ) 2% target. The stability is attributed to government subsidies offsetting the impact of higher oil prices due to the Middle East conflict.

According to Ryohei Ikeda, an analyst at Mizuho Research Institute, 'Higher crude oil and naphtha prices are increasingly being passed on to consumer prices, especially for daily necessities, which will push inflation upward.' However, subsidies for electricity and gas bills act as a downward force. The wholesale price index in Japan remained elevated, rising 7.6% from a year earlier.

Rising fuel costs and higher import prices due to the weak yen have added pressure to the economy. Oil prices rose on Friday, with both major benchmarks tracking over $100 a barrel for the first time since mid-May. Analysts expect the BOJ to hike interest rates to 1.25% at its upcoming meeting.