Tokyo Inflation Surges, Fueling Expectations of Further BOJ Rate Hikes

Tokyo's consumer inflation accelerated in September, with core prices rising faster than expected. The Bank of Japan (BOJ) has been closely monitoring inflation trends, and this data reinforces market expectations that it may continue raising interest rates.

The Tokyo Core Consumer Price Index (CCPI), which excludes volatile fresh food prices, rose 2.7% year-on-year in September, beating economists' median forecast of 2.4%. This increase marks a significant acceleration from the previous month's 1.8%, and shows that underlying price pressures remain above the BOJ's 2% target.

The data comes after the BOJ raised its policy rate to 1.25% in September, the highest level in over three decades. Some policymakers have signalled a willingness to consider further tightening if inflation risks persist, while others caution against rapid rate hikes due to concerns about consumption and growth.