Tokyo Core Inflation Hits 2.7% Year-Over-Year, Bolstering Case for Further Rate Hikes

Tokyo's core inflation rate accelerated in September to its fastest pace in 10 months, rising 2.7% year-over-year and exceeding expectations of a 2.4% gain.

The data, which is considered a leading indicator for nationwide trends, will be taken into account by the Bank of Japan when it issues new quarterly inflation forecasts at its next policy meeting on October 29-30.

According to Masato Koike, senior economist at Sompo Institute Plus, core inflation 'will continue to accelerate as a trend due to rising energy costs from the Middle East conflict and subsequent second-round effects.'

The BOJ raised interest rates to a 31-year high last month, with its governor signaling that the central bank has entered a new phase focused on preventing inflation from overshooting its target.