Japan Inflation Inches Closer to BOJ Target

Tokyo inflation picked up in August, with core Consumer Price Index (CPI) rising 1.8% from a year earlier, matching economist forecasts and inching closer to the Bank of Japan's 2% target.

The so-called core-core index, which excludes both fresh food and energy costs, climbed 2.0% in August, up from 1.8% in July, while headline inflation in the capital reached 1.9% from 1.8%.

Tokyo's inflation has remained resilient despite a strong yen and government subsidies on fuel and gas that have helped ease some import costs. Wholesale inflation has spiked recently, with producer prices rising 7.2% in July from a year earlier, leading analysts to expect businesses will pass higher fuel and input costs on to consumers.

The Bank of Japan raised its key interest rate to 1% in June and kept policy steady in July while signaling greater urgency about mounting inflation risk. Market expectations have shifted in recent weeks, with investors increasingly betting that the BOJ will hike rates as soon as September, potentially accelerating beyond the current twice-a-year cadence.