Tokyo Core Inflation Slows for Third Month

Core consumer prices in Tokyo’s Ku-area rose 2.5% year-on-year in August 2025, easing for the third consecutive month and in line with market expectations.

While inflation has moderated, it remains above the Bank of Japan’s 2% target, sustaining speculation of another rate hike later this year.

Governor Kazuo Ueda recently noted that wages are expected to rise further amid a tightening labor market, reinforcing the view that conditions for additional tightening are gradually taking shape.

At its July meeting, the BOJ left interest rates unchanged but raised its inflation outlook and struck a more upbeat tone on the economy.

Policymakers have paused their rate hike cycle largely out of concern over the potential impact of US tariffs on Japan’s export-driven economy.