Consumer prices excluding fresh food rose 2.7% from a year earlier, accelerating from 2.6% in June, the Interior Ministry said on Friday. The result was in line with consensus estimates.
The tightness of the core inflation gauge indicates the likelihood that the Bank of Japan will continue to consider further interest rate hikes. Ueda is scheduled to outline the outlook for monetary policy in parliament this morning at a special hearing following the plunge in global markets earlier this month, triggered in part by the central bank’s interest rate hike in late July.
Economists expect the BOJ chief to dilute some of the hawkish stance he displayed last month as he seeks to reassure investors that he will not rush to raise rates or ignore the need to maintain market stability while considering policy.
The rise in inflation was widely expected given the temporary suspension of government subsidy programs.
Another index that excludes energy costs as well as fresh food prices offered a contrasting view of the deeper inflation trend, as it slowed to 1.9% from 2.2%, falling below the 2% level for the first time since September 2022.
While the pace of this more specific measure of price growth has continued to weaken over the past year, that hasn’t stopped the central bank from raising rates. Still, the slowdown below 2% may strengthen the argument for waiting for more data before raising rates again.
The BOJ also highlighted the importance of service prices when examining the inflation trend. According to the report, they rose 1.4% from a year earlier, a slowdown from 1.7% in June.
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