Japan’s core inflation in October rises to a 3-month high, supporting the case for rate hikes
Customers check out vegetables and other groceries at a supermarket in Tokyo on June 20, 2025.
Kazuhiro Nogi | Afp | Getty Images
Japan’s core inflation in October rose at the highest rate since July, in line with market forecasts on Friday, supporting the argument for a rate hike by the Bank of Japan.
Core inflation, which excludes fresh food prices, was 3%, as expected by economists surveyed by Reuters.
The headline inflation rate rose to 3%, above the BOJ’s 2% target for the 43rd month in a row.
The “core” inflation rate, which excludes fresh food and energy prices, rose to 3.1% from 3% in September.
Rice inflation continued to ease for the fifth consecutive month, falling to 40.2% from 49.2% in the previous month.
of japan Nikkei 225 The yen strengthened by 0.1% against the dollar, trading at 157.5, while it was down 1.58%. Japanese Finance Minister Satsuki Katayama signaled the possibility of intervention in the market, saying she was “alarmed by recent unilateral, sharp movements in the foreign exchange market,” Reuters reported.
A stronger yen may reduce domestic inflation but reduce the competitiveness of exports.
As BOJ president, CPI data also arrived Kazuo Ueda reportedly His first bilateral meeting with newly elected Prime Minister Sanae Takaichi took place earlier this week.
During the meeting, Ueda told Takaichi that the central bank was “gradually increasing interest rates to smoothly guide inflation to the 2% target and enable the economy to achieve sustainable growth,” Reuters reported.
Takaichi has been an advocate of loose monetary policy and told the country’s parliament earlier this month that he hoped the BOJ would “conduct policy appropriately” so that the 2% inflation target would be achieved through wage increases rather than cost-raising factors.
“The type of inflation we are seeing now is not good,” Takaichi reportedly said. The BOJ governor also said Takaichi had not made any requests regarding monetary policy.
With inflation running above target and GDP growth figures weakening as Japan takes a hit from US tariffs, the central bank is currently stuck between a rock and a hard place.
Japan’s GDP contracted for the first time in six quarters in the three months to September, falling 0.4% sequentially and falling 1.8% year-on-year.
