Tokyo Core Inflation Hits 10-Month High, BOJ Hikes Loom

Tokyo's core inflation rate has accelerated in September, reaching its fastest pace in 10 months. The data is widely regarded as a leading indicator of nationwide trends and will be among the factors considered by the Bank of Japan when it updates its quarterly inflation forecasts on October 29-30.

Market participants have reduced bets of a back-to-back hike this month, but many expect the BOJ to raise its policy rate in December to forestall the risk of inflation overshoot. According to Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute, 'even when discounting one-off factors, the inflation numbers are strong and show firms are steadily passing on rising costs from the weak yen and Iran war.'