Tokyo core inflation hits 2.6% in October, outpacing central bank target

Core inflation in Tokyo accelerated to 2.6% in October, a figure that exceeded the Bank of Japan's 2% target. Government data released on Friday showed the annual increase in the core consumer price index, which excludes fresh food but includes fuel, matched median market forecasts.

The October reading followed a 2.7% rise recorded in September. A separate measure that strips out volatile fresh food and fuel costs also registered a 2.6% increase year over year. This underlying inflation rate slowed slightly from the 2.9% gain seen in September, though it remained well above the central bank's benchmark.

The data arrived hours before the Bank of Japan issued its monetary policy announcement. Market participants expected the central bank to maintain its current stance, with policymakers likely to emphasize their determination to continue raising interest rates. This approach aims to prevent inflation from surpassing its target levels.

Tokyo price trends are frequently monitored as leading indicators for nationwide consumer price movements. The sustained increases support the central bank's view that rising producer prices will drive broader and faster consumer inflation across the country.

The Bank of Japan lifted its policy rate to a 31-year high last month. Governor Kazuo Ueda has indicated that the bank has entered a phase focused on guarding against underlying inflation overshooting its target. This shift has raised expectations for additional rate hikes in the coming months.