TOKYO :Core inflation in Japan’s capital held steady in September and stayed well above the central bank’s 2 per cent target, data showed on Friday, as price pressures keep alive market expectations of a near-term interest rate hike.
The data will be among information the Bank of Japan will scrutinise at its policy meeting on October 29-30, when the board will produce fresh quarterly growth and price forecasts that will serve as key factors in its rate decision.
The Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 2.5 per cent in September from a year earlier, slower than a median market forecast for a 2.8 per cent gain.
The rise in Tokyo core CPI, seen as a leading indicator of nationwide trends, followed a 2.5 per cent increase in August.
An index that strips out both volatile fresh food and fuel costs, which is closely watched by the BOJ as a better gauge of underlying inflation, rose 2.5 per cent in September after a 3.0 per cent gain in August.
Food inflation, excluding the cost of fresh food items like vegetables, hit 6.9 per cent in September after a 7.4 per cent gain in August.
The BOJ ended a massive, decade-long stimulus programme last year and raised short-term interest rates to 0.5 per cent in January, on the view that Japan was on the cusp of durably hitting its inflation target of 2 per cent.
While nationwide core inflation has held above 2 per cent for well over three years, BOJ Governor Kazuo Ueda has stressed the need to tread cautiously on further rate hikes to ensure price rises are driven by wage gains and robust domestic demand.
The BOJ kept interest rates steady last week. But in a sign of growing awareness within the board about mounting price pressure, two members dissented and proposed unsuccessfully to hike rates to 0.75 per cent.
A Reuters poll, taken before last week’s BOJ meeting, showed a majority of economists expect another 25-basis-point hike by year-end. But those surveyed are split on the timing with bets centering on October and January.
