MNI BRIEF: Japan Sept Core CPI Rises 2.8% Vs. Aug 3.1%

The y/y rise of Japan's annual core consumer price inflation rate slowed to 2.8% in September from August's 3.1% but stayed above the Bank of Japan's 2% target for the 18th straight month, data released by the Ministry of Internal Affairs and Communications showed on Friday.

September’s read is the first time in 13 months core CPI has fallen below 3%.

The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) rose 4.2% y/y in September, slowing from August's 4.3%.

The BOJ board will likely revise up the median forecast for core CPI this fiscal year from July’s 2.5% to about 3% at the October 30-31 meeting as the y/y drop of core CPI is slower than expected.

The negative contribution from energy items on CPI widened to -1.00 pp in September from -0.84 pp in August, while prices excluding perishables rose 8.8% y/y from the prior month's 9.2%.

Prices for processed foods, accounting for 15% of the total CPI on which BOJ officials focus and are sensitive to, rose 9.9% in September, slowing from August’s 10.3%, indicating pass-through of cost increases continued amid solid demand.