By Leika Kihara and Takahiko Wada
TOKYO, Oct 2 (Reuters) – Annual core inflation in Japan’s capital accelerated in September, data showed on Friday, highlighting mounting price pressures that bolster the case for further interest rate hikes.
The data, which is considered a leading indicator of nationwide trends, will be among factors that affect the Bank of Japan’s fresh quarterly inflation forecasts due at its next policy meeting on October 29-30.
The core consumer price index, which excludes fresh food but includes fuel costs, in Tokyo rose 2.7% in September from a year earlier, government data showed, accelerating from a 1.8% gain in August and exceeding a median market forecast for a 2.4% gain.
An index stripping away the effect of fresh food and fuel, which is closely watched by the BOJ as a better gauge of trend inflation, rose 3.0% in September after a 2.0% gain in August.
While government fuel subsidies had kept core consumer inflation below the BOJ’s target, a recent spike in wholesale inflation has highlighted mounting price pressure from the Middle East conflict, a weak yen and robust AI-related demand.
The BOJ raised interest rates to a 31-year high last month, with its governor signalling the central bank has entered a new phase focused on preventing inflation from overshooting its target, opening the door to further rate hikes.
(Reporting by Leika Kihara and Takahiko Wada; Editing by Jacqueline Wong)
