Tokyo Core Inflation Surges, Sparking Rate Hike Expectations

Tokyo's core inflation rate surged in September to its fastest pace in 10 months, exceeding expectations and putting further pressure on the Bank of Japan (BOJ) to raise interest rates.

The Tokyo Core Consumer Price Index (CCPI), which excludes fresh food but includes fuel costs, rose by 2.7% year-over-year in September, surpassing a median market forecast of 2.4%. This acceleration marks the first time the CCPI has exceeded the BOJ's 2% target since January.

The data also showed that service-sector inflation hit 2.3%, up from 1.4% in August, indicating that businesses are passing on rising labor costs to consumers.

Economists expect core inflation to continue accelerating due to rising energy costs and second-round effects of the Middle East conflict.