Caixin
Aug 30, 2024 06:16 PM
ECONOMY

Tokyo Inflation, Output Recovery Suggest BOJ Will Raise Rates Again

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A shopper in the Shibuya area of Tokyo, Japan. Photo: Bloomberg
A shopper in the Shibuya area of Tokyo, Japan. Photo: Bloomberg

(The Wall Street Journal) — Consumer inflation in the Tokyo metropolitan area rose at a faster-than-expected pace in August, stoking speculation that the Bank of Japan will soon raise interest rates again.

Tokyo’s core consumer-price index, excluding volatile fresh food, increased by 2.4% on-year in August, partly due to the phasing out of energy subsidies. That compared with a 2.2% rise in July, government data showed Friday.

The CPI increase was larger than economists’ forecast of 2.2% growth. Tokyo CPI is seen as the leading indicator for nationwide inflation.

Some economists said the pickup in prices in the Tokyo area means broader inflation could stay above the Bank of Japan’s 2% target for longer than expected.

“We still expect underlying inflation to fall below 2% over the coming months, but the latest Tokyo CPI figures point to some upside risks to that forecast,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

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