Tokyo Core Inflation Rises Above BoJ Target

Core consumer prices in Tokyo’s central wards rose 2.7% yoy in September 2026, following a 1.8% gain in August and exceeding expectations of 2.4%. It was the fourth straight month of acceleration and marked the fastest increase since November 2025, signaling broadening price pressures stemming from the Middle East conflict. Inflation rose above the BoJ’s 2% target for the first time in nine months, driven by higher oil prices amid the Middle East conflict, despite the government raising subsidies on regular gasoline. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, rose 3.0% yoy, up from 2.0% in August, marking the highest reading in 13 months. The BoJ raised its policy rate by 25 bps to 1.25% at its September meeting, the highest level since April 1995, in response to persistent inflation driven by higher oil prices amid the ongoing Middle East conflict.

Core consumer prices in Tokyo’s central wards rose 1.8% yoy in August 2026, following a downwardly revised 1.7% gain in July and exceeding expectations of 1.7%. It was the third straight month of acceleration and marked the fastest increase since March, signaling broadening price pressures stemming from the Middle East conflict. However, inflation remained below the BoJ’s 2% target for a 7th consecutive month, as fuel subsidies and favorable base effects helped limit the impact of higher raw material costs linked to the conflict. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, increased 2.0% yoy, up from a downwardly revised 1.8% in July, marking the highest reading in five months. The BoJ held its policy rate at its July meeting after raising it by 25 bps to its highest level since September 1995 at its June meeting, in an effort to prevent higher oil prices from fueling inflation.

Core consumer prices in Tokyo’s central wards increased 1.9% yoy in July 2026, following a 1.6% rise in the previous month and exceeding expectations of 1.7%. It was the second consecutive month of acceleration and marked the fastest increase since January, signaling broadening price pressures stemming from the Middle East conflict. However, inflation remained below the Bank of Japan’s 2% target for a sixth consecutive month, as fuel subsidies and favorable base effects helped limit the impact of higher raw material costs linked to the conflict. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, increased 2.0% yoy, up from 1.9% in June, marking the highest reading in four months. The BoJ raised interest rates by 25 bps to their highest level since September 1995 at its June meeting, marking the first rate hike since last December, in an effort to prevent higher oil prices from fueling inflation.