Japan’s consumer price index (CPI) rose more than expected in September, although the overall inflation rate dropped from its 10-month high.
The core CPI, excluding fresh food, increased by 2.4% year-on-year, surpassing the expected 2.3%, but down from 2.8% the previous month.
A more specific core reading, excluding both fresh food and energy, rose to 2.1% from 2% the month before.
Overall CPI inflation fell to 2.5% from 3% in the previous month.
These numbers raise questions about the Bank of Japan’s ability to raise interest rates again, as consumer spending appears to be slowing after a robust increase earlier this year.
Additionally, new Prime Minister Shigeru Ishiba indicated that Japan isn’t ready for another rate hike.
Despite potential challenges, the increase in underlying inflation suggests that it may remain near the BOJ’s target of 2%, bolstered by significant wage increases from unions this year.
The BOJ kept interest rates steady in September, expecting inflation to remain around the 2% target sustainably.
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