Tokyo Core Inflation Accelerates, Fuelling Expectations of BOJ Rate Hike

Tokyo's core inflation accelerated for a third straight month in August, according to government data. This has strengthened expectations that the Bank of Japan (BOJ) could raise interest rates as early as September.

The Tokyo core consumer price index (CPI), which excludes volatile fresh food prices, rose 1.8% from a year earlier in August. This increase was slightly above the 1.7% rise economists expected and brought inflation closer to the BOJ's 2% target.

The August reading followed a 1.7% increase in July and was driven largely by continued price increases for food items. Tokyo's inflation data is closely watched because it tends to provide an early indication of nationwide price trends.