Japanese Consumer Price Index Inflation

Japanese consumer price index inflation rose as expected in August amid a sustained increase in consumption linked to higher wages, just before a Bank of Japan (BOJ) meeting.

Core Consumer Price Index (CPI), which excludes volatile fresh food prices, rose 2.8% year-on-year to a 10-month high in August, according to government data released on Friday. This figure aligns with expectations and is an increase from the 2.7% recorded in the previous month.

A core reading excluding both fresh food and energy prices, closely monitored by the BOJ as an indicator of underlying inflation, rose to 2% in August, up from 1.9% the prior month.

Headline CPI inflation increased to 3% in August, rising from 2.8% the previous month, marking a 10-month high.

This data release comes just prior to the conclusion of a BOJ meeting and aligns with the central bank’s forecasts that inflation will rise alongside increased wages and enhanced private consumption.

Underlying inflation also reached the BOJ’s annual target of 2% in August.

The central bank is widely anticipated to maintain interest rates unchanged following this meeting, but there is an expectation for future rate hikes as inflation is forecasted to rise in the coming months and into 2025.

The recent inflation increase is attributed to substantial wage hikes achieved by Japanese labor unions earlier this year, the effects of which are being observed nationwide.