Japan’s core inflation expected to reach highest level in 8 years in August

Japanese consumer core inflation is likely to reach its highest level in nearly 8 years in August. This is because companies have passed on higher commodity costs from the weaker yen. This underscores the ongoing price pressure on the economy.

Economists estimate that the nationwide core consumer price index (CPI), which excludes fluctuating prices for basic food items but includes energy, rose 2.7% last month from a year earlier. That would be the fastest increase since November 2014 and up from a 2.4% rise in July.

“Inflation seems to have increased since July. The expenses such as utilities, processed food, overnight stays and eating out tends to be higher,”

said Takeshi Minami, chief economist at the Norinchukin Research Institute.

Minami said the expected increase in core CPI would be the fastest in 31 years, as it excludes the impact of previous sales tax increases.

The forecast also means that the core consumer price index (CPI) will be above the Bank of Japan’s (BOJ) 2% inflation target for the fifth consecutive month, reiterating the pressure on households facing higher prices.

The BOJ maintained its short-term interest rate target of -0.1% and promised to lower the 10-year government bond yield to around 0% at its next meeting on September 21-22.

The government will release the CPI data on September 20, two days before the central bank finishes its monetary policy meeting.

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