The Bank of Japan’s key inflation measure has reached its highest level in three years, strengthening the argument for further interest rate hikes. The central bank’s price trend indicator, which excludes fresh food and special factors, climbed to 3.2% in September, up from 2.6% the previous month. This marks the first time the gauge has surpassed the BOJ’s 2% target in over three years.
The latest data, released Tuesday, suggests that underlying inflation in Japan is accelerating. The surge in the indicator supports the case for the BOJ to continue tightening monetary policy, following recent rate increases. The central bank has been gradually moving away from its long-standing ultra-loose policy as inflation pressures build.
The report highlights a significant shift in Japan’s economic landscape, where persistent deflation has been a challenge for decades. The 3.2% year-over-year rise in consumer prices signals a potential turning point, though some economists caution that sustained inflation above the 2% target may not yet be assured.