Japan’s core inflation rises to 2.1% in September
The reading exceeds the central bank’s 2% target for the first time in nine months, ahead of next week’s policy meeting.
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The reading exceeds the central bank’s 2% target for the first time in nine months, ahead of next week’s policy meeting.
Japan’s annual core consumer inflation accelerated to 2.1% in September, exceeding the Bank of Japan’s 2% target for the first time in nine months, according to figures reported by Reuters on October 23. The reading matched the median market forecast. Japan’s core consumer price index measures price changes excluding fresh food, but includes fuel costs.
The central bank had raised its key interest rate to 1.25% in September, a 31-year high. Reuters reported that the inflation figures strengthened the case for further rate increases, which would raise borrowing costs.
| Measure | August 2026 | September 2026 |
|---|---|---|
| Core inflation: excludes fresh food, includes fuel | 1.7% | 2.1% |
| Inflation excluding fresh food and fuel | 1.9% | 2.4% |
The increase in the measure excluding both fresh food and fuel shows that faster price growth was not confined to fuel. The Bank of Japan watches this measure as a better guide to price pressure driven by demand.
Reuters attributed the pressure to higher fuel costs from the prolonged Middle East conflict, elevated import prices driven by the weak yen and strong demand for artificial intelligence (AI). Those pressures were blunting the effect of government fuel subsidies, the report said.
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Economy Minister Minoru Kiuchi said on October 23 that Japan had not yet met the conditions for the government to officially declare an end to deflation, meaning persistent price falls. He said that decision would take account of various factors to ensure Japan would not return to such periods.
The Bank of Japan’s next policy meeting is scheduled for the following week. Sources told Reuters the bank was expected to leave policy unchanged, but might raise its inflation forecast and signal readiness for further interest-rate increases.
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