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MNI BRIEF: Rising Tokyo Inflation Underscores BOJ Challenges

(MNI) Tokyo

Tokyo CPI -- seen as a guide to nationwide CPI published a few weeks later -- rose to a fresh 8-year high in August, further underlining policy and communication challenges for the Bank of Japan.

Tokyo core inflation rate rose 2.6% y/y in August, accelerating from +2.3% in July, recording a12th straight rise month of y/y increases, and is expected to rise further, data from the Ministry of Internal Affairs and Communications showed Friday. In a recent interview with MNI, a former BOJ chief economist told MNI national CPI was likely to peak around 3% early in 2023 (See MNI INTERVIEW2: Kuroda’s BOJ To Hold To Policy Stance - Kameda)

As Kameda notes, the BOJ will likely look through price rises for now, as prices rises are not seen as sustainable over the medium term -- a key to BOJ thinking. However, a continuing pick up in prices in the service sector will be closely watched by policymakers. Prices across the eating and drinking services sector, a metric closely watched by Bank of Japan officials, rose 3.8% y/y in August, up from 3.2% in July.

MNI Tokyo Bureau | +81 90-2175-0040 |
MNI Tokyo Bureau | +81 90-2175-0040 |

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