Japan Inflation Accelerates to 1.8%, Boosting Case for Rate Hike

Japan's core consumer inflation rose to 1.8% in July, driven by import costs and a weak yen.

The Bank of Japan (BOJ) may hike rates to 1.25% in September, following a 1.6% rise in June and remaining below the BOJ's 2% target for a seventh straight month.

Analysts expect core inflation to accelerate above the BOJ's target in the coming months as the transfer of raw material costs broadens, which led to a spike in wholesale inflation.

Masato Koike, senior economist at Sompo Institute Plus, said: 'Core consumer inflation is likely to re-accelerate given renewed tension in the Middle East, which will push up crude oil prices and add to price pressures from a weak yen.'