Tokyo core CPI rises 1.8% in August, supports rate hike expectations

Tokyo's core consumer price index rose 1.8 percent in August from a year earlier, data released Friday showed, marking a slight acceleration that reinforces expectations the Bank of Japan will continue raising interest rates. The increase, which matched market forecasts, followed a 1.7 percent rise in July and kept inflation running just below the central bank's 2 percent target. The Tokyo CPI, which excludes volatile fresh food prices, is closely watched as a leading indicator for nationwide inflation trends. A narrower measure that strips out both fresh food and energy costs, which the Bank of Japan monitors for signs of persistent underlying inflation, increased 1.9 percent in August. This was down slightly from a 2.0 percent gain in July but remained elevated. Headline inflation in the capital, which includes all items, accelerated to 1.9 percent from 1.8 percent in the previous month. The data suggests that underlying price pressures remain steady despite some moderating factors. A stronger Japanese yen, bolstered by recent joint currency market intervention with the United States, has reduced the cost of some imported goods.