MNI BRIEF: Japan Oct Core CPI Rises 3.0% Vs. Sept 2.9%

Japan’s annual core consumer inflation rose to 3.0% y/y in October from 2.9% in September, in line with expectations, driven by higher prices for household durable goods, although food prices excluding perishables eased, data released Friday by the Ministry of Internal Affairs and Communications showed.

Core inflation remained above the Bank of Japan’s 2% target for the 43rd straight month and returned to the 3% level for the first time in three months.

The index was supported by a rebound in household durable goods prices (+0.4% y/y vs -1.8% in September), while the pace of increase in food prices excluding perishables slowed to 7.2% from 7.6% in September.

Underlying inflation, measured by the core-core CPI (excluding fresh food and energy), rose 3.1% y/y in October, edging up from 3.0% in September.

Services prices – a key gauge for the BOJ in assessing the strength of the wage–price cycle – increased 1.6% y/y in October, up from 1.4% in September. BOJ officials noted that services inflation remains below 2% and has not accelerated sufficiently to ensure achievement of the price target.

Prices for processed foods, which account for roughly 15% of the CPI basket and are closely watched due to their sensitivity to economic activity, rose 6.4% y/y in October, slowing from 6.7% in September.