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Japan core inflation in September surges to its highest this year at 2.1% - CNBC
Key Points
- Headline inflation came in at 2.1%, while the so-called “core-core” inflation, which excludes prices of fresh food and energy was at 2.4%.
- Higher inflation could push the Bank of Japan for another rate hike this year.
- The increase appeared to be driven by price increases in the prices of durable goods and public utilities charges.
- Japan’s Lower House began debating a bill on Tuesday to cut the consumption tax on food to 1% from 8% for two years, in an effort to contain price rises.
An employee at the Celsior Wadamachi supermarket in Yokohama, Japan, on Thursday, Jan. 15, 2026. Soaring food costs are a key component driving broader inflation higher, with data Friday expected to show consumer price growth has stayed above the central bank’s 2% target for four straight calendar years.
Bloomberg | Bloomberg | Getty Images
Japan’s core inflation in September hit its highest this year at 2.1%, overshooting analysts’ expectations, pressured by steeper import costs due to a weak yen and the indirect impact of higher energy costs.
Core inflation, which strips out prices of fresh food, was in line with estimates by economists polled by Reuters, and accelerated from the 1.7% in the prior month.
Headline inflation came in at 2.1%, while the so-called “core-core” inflation, which excludes prices of fresh food and energy and is the Bank of Japan’s preferred gauge, was at 2.4%.
“That acceleration was noteworthy, not least because it occurred despite a sharp slowdown in fresh food inflation and continued energy deflation,” said Abhijit Surya, senior APAC economist at Capital Economics.
Rice prices notably declined 20.6% year on year, however, Surya said that this sharp drop could not prevent overall goods inflation from picking up to 2.8%, up from August’s 2.6%.
“One reason may be that the indirect effects of the energy shock are continuing to feed through, with inflation in ‘other industrial products’ rising to a 13-month high of 3.9%,” Surya added.
Consumer energy prices, which fell 0.6% in September, have mostly declined so far this year, despite the Iran war, due to subsidies handed out by the Takaichi administration.
Japan’s benchmark Nikkei 225 declined 1.62% on Friday, while the yen strengthened to 156.15 against the dollar.
