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Investing.com-- Japanese consumer price index inflation rose in line with expectations in September, while underlying inflation also picked up, remaining well above the Bank of Japan’s annual target range.
Headline CPI inflation rose to 2.9% year-on-year in September from 2.7% in the prior month, meeting analysts’ expectations, government data showed.
National core CPI, which excludes volatile fresh food prices, also rose to 2.9% y-o-y in September as expected, from a 2.7% print in August.
A core inflation reading that excludes both fresh food and energy prices fell to 3.0% y-o-y from 3.3% in the prior month, remaining largely sticky and well above the BOJ’s 2% annual target.
The BOJ closely watches the reading as a gauge of underlying inflation.
Uncertainty over the full impact of U.S. trade tariffs on Japan has kept the Bank of Japan from hiking rates in the near term. But sticky inflation, especially in underlying prices, could keep the BOJ geared towards an eventual rate hike.
Governor Kazuo Ueda had stressed that underlying inflation remains uncertain and that the central bank will examine more data without any preconceptions before moving on rates.
The inflation backdrop comes as new Prime Minister Sanae Takaichi assumes office, advocating expansive fiscal stimulus and promoting looser monetary policy -- a stance that may complicate the BOJ’s path to tightening.