Tokyo CPI Data Reinforces BoJ Hawkish Stance Amid Renewed Energy Subsidies

The Tokyo Consumer Price Index (CPI) data for August was released recently, and it's been analyzed by Societe Generale's Reo Sakida and Jin Kenzaki. According to their assessment, the CPI readings were broadly in line with expectations.

One of the key factors affecting inflation is the renewed energy subsidies, which are likely to continue dragging on CPI through October. This has led to a slowdown in non-fresh food inflation despite upstream cost pressures.

On the other hand, services inflation picked up mainly due to rents and medical charges, but this still has limited implications for nationwide CPI. However, it does support the Bank of Japan's (BoJ) hawkish stance.

The BoJ Deputy Governor Himino noted yesterday that repricing activity is likely to intensify in the coming months, while the Teikoku Databank survey points to another wave of price revisions toward year-end. This continued trend supports the BoJ's hawkish path.