Tokyo Core Inflation Rate Surges to 10-Month High

Tokyo's core inflation rate jumped in September to its fastest pace in 10 months, sparking concerns about mounting price pressure and further interest rate hikes from the Bank of Japan. The data, seen as a leading indicator for nationwide trends, is expected to be considered by the BOJ when it updates its quarterly inflation forecasts on October 29-30.

Market participants have reduced bets on a back-to-back hike this month, but many still expect the BOJ to raise its policy rate in December. This move would aim to prevent inflation from overshooting.

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.'