MNI BRIEF: Japan Oct Tokyo Core CPI Rises 1.8% Vs. Sept 2.0%

MNI (TOKYO) - The Tokyo core inflation rate slowed to 1.8% y/y in October from September’s 2.0% for the second straight deceleration and fell below the bank’s 2% target for the first time in five months, data from the Ministry of Internal Affairs and Communications showed on Friday.

The result was in line with market expectations. 

Lower energy prices (+2.5% vs. +9.5%) drove the result, although prices for food excluding perishables rose 3.8% vs. +2.8%.

The core-core CPI (excluding fresh food and energy) -- a key indicator in the underlying trend of inflation – rose 1.8% y/y in October, accelerating from September’s 1.6%, but below the bank’s 2% target for the seventh straight month. Processed food prices, another key focus, rose 2.5% in October, also accelerating from September's 2.0%.

BOJ officials are closely watching services prices, which rose 0.8% y/y in October, accelerating from September’s 0.6%, supporting the bank’s policy normalisation. Nationwide October CPI is due Nov. 22.