MNI BRIEF: Japan's Oct Tokyo CPI Rises 3.4%; Three Decade High

The year-on-year rise in Tokyo's core inflation rate accelerated to 3.4% in October from 2.8% in September, indicating the nationwide core CPI will likely rise above 3% in October, data from the Ministry of Internal Affairs and Communications showed on Friday.

October’s rise of 3.4%, excluding the impact of sales tax hike, is the highest since October 1989 when it also rose 3.4% - and was the 14th straight rise. The Bank of Japan is likely to revise its core CPI forecast for this fiscal year after it completes its two-day meeting later on Friday. (See MNI BOJ WATCH: BOJ TO Maintain Easy Policy, Forward Guidance)

The index was boosted by high prices for energy (+24.2% vs. +24.2%) and for foods excluding perishable foods (+5.9% vs. +4.5%) as well as communications (+1.8% vs. -14.4%).

The core-core CPI (excluding fresh food and energy) -- a key indicator of the underlying trend of inflation – rose 2.2% y/y in October, also accelerating from 1.7% in September.

Prices for communications rose 1.8% y/y in October from -14.4% in September as the negative contribution from low mobile phone charge last year waned. Prices for energy item rose 24.2% y/y in October, unchanged from +24.2% in September.

Tokyo saw processed food prices, an item that BOJ officials monitor and is sensitive to economic activity, rise 6.4% in October after rising 4.8% in September.