MNI BRIEF: Japan Sept Core CPI Rises 2.9% Vs. Aug 2.7%

Japan’s core consumer inflation accelerated to 2.9% y/y in September from August’s 2.7%, in line with market estimates, as higher energy prices offset a slowdown in food prices excluding perishables, data released Friday by the Ministry of Internal Affairs and Communications showed.

The index remained above the Bank of Japan’s 2% target for the 42nd consecutive month but stayed below 3% for a second straight month.

Energy prices rose 2.3% y/y after falling 3.3% in August, while food prices excluding perishables slowed to 7.6% from 8.0%.

The underlying inflation rate, or core-core CPI — which excludes both fresh food and energy — rose 3.0% y/y, easing from 3.3% in August.

Services prices, which BOJ officials are monitoring closely to assess the strength of the virtuous cycle between wages and prices, rose 1.4% y/y in September after a 1.5% increase in August. The BOJ judged that the pass-through of high costs to services prices has peaked.

Processed food prices, which account for about 15% of the CPI basket and are sensitive to economic activity, rose 6.7% y/y in September, accelerating from 6.5% in August.

MNI reported this week the BOJ Board is likely to maintain its assessment that risks to prices are “balanced” at next week’s policy meeting. (See MNI POLICY: BOJ Board Likely To Maintain Price View)