MNI BRIEF: Japan Sept Tokyo Core CPI 2.5% Vs. Aug 2.8%

The y/y rise in the Tokyo core inflation rate slowed to 2.5% in September from August's 2.8% driven by lower energy prices, indicating the nationwide September core CPI will fall from August's 3.1%, data from the Ministry of Internal Affairs and Communications showed on Friday.

The core-core CPI (excluding fresh food and energy) – a key indicator in the underlying trend of inflation – rose 3.8% y/y in September, also slowing from August's 4.0% but above the bank's 2% target for the 16th straight month.

The September Tokyo core-core CPI printed largely in line with Bank of Japan board member expectations, which saw upside risk to prices and forecasted Japan’s core CPI will likely not weaken as much as the bank’s baseline scenario due to ongoing pass-through of cost increases.

Energy prices fell 18.7% in September compared to August's 15.9% drop, while food excluding perishable foods also experienced a slower rise, increasing 8.5% against August's 8.9% gain. Tokyo processed food prices, a key indicator for the BOJ, rose 10.1% in September, down from 10.3% in August, while eating and drinking services – another key factor – rose 6.8% after rising 6.8% in August.