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

The year-on-year rise in Tokyo’s core consumer price index accelerated to 2.8% in October from 2.5% in September, marking the 12th consecutive month above the Bank of Japan’s 2% target, data from the Ministry of Internal Affairs and Communications showed Friday.

The October increase was driven by higher water charges (0.0% vs -34.6%) and household durable goods (0.0% vs -1.3%), while energy price gains eased slightly to 2.2% from 2.7%.

The core-core CPI, which excludes fresh food and energy and is closely watched as a gauge of underlying inflation trends, also rose 2.8% y/y, up from 2.5% in September. It remained above 2% for the eighth consecutive month.

Processed food prices, a key focus for BOJ officials given their sensitivity to economic conditions, rose 5.9% y/y in October, accelerating from 5.7% in September, while services prices increased 1.6% from 1.5%.

Retail and selling prices rose in October amid corporate price revisions typically implemented in April and October.

The BOJ expects underlying CPI inflation to remain subdued temporarily as economic momentum weakens, before moving toward the 2% target. Officials are watching closely whether food prices excluding fresh items (+6.7% vs +6.9%) continue to moderate as projected.

The BOJ Board in Thursday kept the policy rate at 0.5%. (See MNI BOJ WATCH: Ueda Hints Bank Close To Hike; Wages Key)