Tokyo Inflation Surges Past BOJ Target, Fueling Rate Hike Speculation

Tokyo's core inflation rate accelerated in September to its fastest pace in 10 months, reaching 2.7% from a year earlier.

This increase, which exceeds the Bank of Japan's (BOJ) 2% target for the first time since January, is seen as a significant indicator of nationwide trends and will be taken into account by the BOJ when issuing its next quarterly inflation forecasts on October 29-30.

The core consumer price index in Tokyo rose from a 1.8% gain in August to 2.7%, surpassing the median market forecast of a 2.4% gain and marking the fastest year-on-year pace since November last year when it hit 2.8%.

According to Masato Koike, senior economist at Sompo Institute Plus, 'core inflation will continue to accelerate as a trend due to rising energy costs from the Middle East conflict and subsequent second-round effects.'

Koike expects the BOJ to raise interest rates in December, following last month's increase to a 31-year high.