Japan’s core consumer inflation likely increased again in October, marking a second month of faster price growth, according to a Reuters poll released on Friday. The rise was mainly driven by smaller energy subsidies compared with last year, which pushed utility costs higher, even as food inflation eased.
A survey of 18 economists showed that the nationwide core consumer price index (CPI) — which includes energy costs but excludes volatile fresh food prices — was expected to climb 3.0% year-on-year in October. This follows a 2.9% rise in September and would be the first time in three months that core inflation returns to the 3% level.
Core inflation has now stayed above the Bank of Japan’s 2% target for more than three years. This trend continues to fuel expectations in financial markets that the central bank may move toward an interest rate hike in the near future.
BOJ Governor Kazuo Ueda said on Thursday that the bank aims for stable inflation supported by wage growth and a healthier economy.
Analysts noted that the expected October increase mainly reflects a comparison with last year’s large energy subsidies, while food prices slowed as rice-related increases moderated.
Experts at Mizuho Research & Technologies explained that energy costs played a bigger role this year because last summer’s subsidies were significantly higher. At the same time, food inflation cooled as rice prices stabilized.
Japan’s Ministry of Internal Affairs will release the official CPI data at 8:30 a.m. on November 21 (2330 GMT on November 20).
