Japan's core inflation slows below 3% for first time in over a year
By Leika Kihara and Takahiko Wada
TOKYO (Reuters) -Japan's core inflation in September slowed below the 3% threshold for the first time in over a year but stayed above the central bank target, keeping alive expectations that policymakers will phase out ultra-easy monetary policy.
The data will be among a host of indicators the Bank of Japan (BOJ) will scrutinise at its two-day policy meeting ending on Oct. 31, when it produces fresh quarterly growth and price forecasts.
«While inflation weakened in September, we think inflation will only fall below the BoJ's 2% target by the end of next year,» said Marcel Thieliant, head of Asia-Pacific at Capital Economics.
The core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.8% in September from a year earlier, government data showed on Friday, slightly exceeding a median market forecast for a 2.7% gain but easing from 3.1% in August.
Utility bills fell reflecting the lagged effect of past oil price falls, helping inflation slow below 3% for the first time since August 2022, the data showed.
Prices of food and daily necessities continued to rise but at a slower pace than in August, a sign that cost-push pressures were easing.
The core-core index, which strips away fresh food and fuel costs and is closely watched by the BOJ as a better gauge of trend inflation, rose 4.2% in September from a year earlier, slowing from a 4.3% gain in August.
While inflation will likely moderate in coming months, a renewed spike in oil costs and persistent yen falls could prod firms to raise prices again, said Shinke Yoshiki, chief economist at Dai-ichi Life Research Institute.
«There's strong uncertainty on the expected pace of declines in inflation,» he said, adding that
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