TOKYO : Japan’s core inflation likely stayed above the central bank’s 2 per cent target for an 18th straight month in September, although consumer prices probably rose at their slowest in more than a year, a Reuters poll showed.
The Bank of Japan (BOJ) will scrutinise the price trends at its next policy meeting on Oct. 30-31, when its board members are expected to make an upward revision to their outlook for inflation, potentially signalling that the central bank was moving closer to the exit from its ultra-easy monetary policy.
The nationwide core consumer price index (CPI), which strips off volatile fresh food items, likely rose 2.7 per cent in September from the same month last year, according to the median estimate of 17 economists, slowing from a 3.1 per cent rise in August.
Although well above the BOJ target, it would still be the slowest inflation since July 2022, when the rate was 2.4 per cent.
Lower utility costs thanks to soft fuel prices likely curbed the core inflation rate, which includes energy items, analysts say.
The so-called “core core” price index excluding both fresh food and energy costs likely rose 4.2 per cent in September, inching down from a 4.3 per cent rise in August, according to SMBC Nikko Securities’ projection.
While the government is set to extend energy subsidies until March 2024, prices have been rising for a wide range of food and consumer goods, underscoring the non-transitory inflation taking hold in the world’s third-largest economy.
A BOJ survey showed on Friday that Japanese households’ inflation expectations rose slightly in the three months to September, with 87 per cent anticipating price hikes in the next 12 months.
The prospect of sustained inflation has raised speculation in markets the BOJ will soon end negative rates and dismantle its yield curve control policy. Critics say the policy distorts bond pricing.
The government will release the September CPI data at 08:30 a.m. on Oct. 20 (2330 GMT, Oct. 19).
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