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Tokyo core-core CPI reaches 2%, bolstering Japan rate hike case
Headline CPI edged up to 1.9% year over year, while the core-core measure excluding fresh food and energy accelerated to the BoJ’s 2% target.
Tokyo inflation firmed in August, with core-core CPI excluding fresh food and energy rising to 2.0% year over year, directly matching the Bank of Japan’s 2% target. Action Forex reports that headline CPI also moved higher from 1.8% to 1.9% year over year and CPI excluding fresh food rose from 1.7% to 1.8% year over year.
The monthly data showed some cooling in momentum, with seasonally adjusted monthly headline inflation slowing from 0.4% to 0.2%, and ex-fresh-food CPI falling from 0.3% to 0.1%. Even so, the composition pointed to ongoing domestic price pressure, according to the report.
The pickup in underlying inflation was supported by food prices rising 3.9% year over year, including fresh food up 5.6%, and food excluding fresh items up 3.6%. Meanwhile, housing rose 1.9% and transport and communications increased 2.8%, while fuel, light and water costs fell 1.6%.
Action Forex links the readings to renewed expectations for further BOJ tightening, noting that BoJ Deputy Governor Ryozo Himino said underlying inflation was approaching 2 percent and reiterated that rates should be raised in a timely manner. The core-core figure at 2% strengthens the case for a rate hike at the September 17 to 18 meeting, despite softer monthly headline inflation.