Tokyo Core Inflation Rate Jumps to 10-Month High

The Tokyo core inflation rate accelerated in September to its fastest pace in 10 months, according to data released on Friday. The annual core inflation in Japan's capital city rose 2.7% from the same month a year earlier.

This increase was above the Bank of Japan's (BOJ) 2% target for the first time since January and marked the fastest year-on-year pace since November, when it reached 2.8%. The BOJ will consider this data when updating its quarterly inflation forecasts at its next policy meeting 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. Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute, stated that '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.'

The core consumer price index in Tokyo rose 3% in September after stripping away the effect of volatile fresh food and fuel prices. This was its fastest year-on-year rise since August 2025.