Tokyo Inflation Rate Surges, Boosting Case for BOJ Interest Rate Hikes

The Bank of Japan is facing mounting pressure to raise interest rates further after Tokyo's core inflation rate jumped in September. The annual core inflation rate in the Japanese capital rose 2.7% from a year earlier, exceeding the median market forecast and marking the fastest pace since November last year.

This development is significant because it indicates that price pressures are building nationwide. According to data released on Friday, the core consumer price index in Tokyo, which excludes fresh food but includes fuel costs, accelerated from 1.8% gain in August to a 2.7% gain in September.

Experts say that rising energy costs due to the Middle East conflict and subsequent second-round effects will continue to drive up inflation. Masato Koike, senior economist at Sompo Institute Plus, expects the BOJ to raise interest rates in December.