Japan's Core Inflation Holds Steady at 1.8%, BOJ Interest Rate Hike Looms

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 is unchanged from July and below the Bank of Japan's (BOJ) target of 2%. The stable inflation rate can be attributed to the offsetting effects of higher oil prices and government subsidies.

Ryohei Ikeda, an analyst at Mizuho Research Institute, noted that rising crude oil and naphtha prices will push consumer prices upward. However, electricity and gas bill subsidies will act as a downward force on inflation. The BOJ is expected to hike interest rates to 1.25% in response to persistent concerns over price pressures and yen weakness.

Wholesale prices in Japan rose by 7.6% in August from a year earlier, while oil prices reached over $100 per barrel for the first time since mid-May. The internal affairs ministry will release CPI data on September 18.