Tokyo Core Inflation Accelerates, Boosts Case for BOJ Rate Hike

Japan's Tokyo core inflation accelerated for the third straight month in August, according to data released on Friday. The government reported that core consumer prices rose 1.8 percent from a year earlier, slightly above market forecasts of 1.7 percent and getting closer to the Bank of Japan's (BOJ) 2 percent target.

The Tokyo core consumer price index, which excludes volatile fresh food costs, was driven by steady price increases in food items. The data will be among factors considered at the BOJ's next policy meeting on September 17-18, when most market players expect a hike in the policy rate to 1.25 percent.

Sompo Institute Plus senior economist Masato Koike expects the BOJ to raise rates next month, saying 'there's little reason for the BOJ to wait until October'. The recent spike in wholesale inflation and the ongoing Middle East conflict are expected to push up energy costs and subsequently lead to broader price increases.