Tokyo Core Inflation Accelerates Amid Middle East Conflict

Tokyo's core consumer price index (CPI) rose 1.9% in July, outpacing forecasts and indicating a broadening of price pressures stemming from the Middle East conflict.

The increase, which marks the sixth consecutive month below the Bank of Japan's (BOJ) 2% target, is driven by continued gains in prices of food and daily necessities. The data also shows that service-sector inflation remained steady at 1.1%, suggesting firms are slow to pass on rising labor costs.

The BOJ is widely expected to maintain interest rates at their current level of 1% after raising them to a 31-year high in June, as the economy faces mounting inflationary pressure from the conflict and a weak yen.