Tokyo Inflation Quickens, Keeping BOJ on Interest Rate Hike Path

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessTokyo Inflation Quickens, Keeping BOJ on Interest Rate Hike PathTokyo’s inflation pace quickened for a second month, keeping the Bank of Japan on track to raise interest rates again in coming months, with the board widely expected to stand pat on Friday.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.2rhydov}9f}94gu4oy87r0g}_media_dl_1.png Japan's ministry of internal aff(Bloomberg) — Tokyo’s inflation pace quickened for a second month, keeping the Bank of Japan on track to raise interest rates again in coming months, with the board widely expected to stand pat on Friday.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe consumer price index excluding fresh food rose 1.9% in July from a year earlier in the capital, the Ministry of Internal Affairs and Communications reported on Friday. That compared with a 1.8% gain forecast by economists surveyed by Bloomberg.A gauge that excludes both fresh food and energy — closely watched by the BOJ as a gauge of underlying inflation — gained 2%, while overall consumer prices also rose 2%. The Tokyo CPI is considered a leading indicator for nationwide price trends.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againSlower declines in costs for electricity and natural gas along with steady gains in prices for processed food helped push the index higher. Gasoline price declines accelerated thanks to government steps. “With the situation in the Middle East dragging on, I believe prices — particularly for energy-related goods — will continue to rise, and we’ll see further increases in the cost of food and other items,” said Takeshi Minami, chief economist at the Norinchukin Research Institute. “So inflation is likely to remain above 2% starting this fall.”Other reports showed the economy remained relatively resilient in June even as the war in Iran continues to create challenges for energy procurement and supply chains. Industrial production rose 1.3% in June from the previous month, the Industry Ministry reported Friday. Output increased by 4.2% from a year earlier. Retail sales edged 0.5% higher from a year earlier and fell 4.1% from the previous month, the ministry reported. Taken together, the data released hours before the central bank decides policy will back the case for authorities to stay on course for more rate hikes, with the main question surrounding what the pace of moves will be. The BOJ is expected to keep the benchmark interest rate unchanged later today after the board raised it last month to around 1%, the highest since 1995. What Bloomberg Economics Says…“Tokyo’s July CPI report shows inflation accelerating as the March-June spike in oil prices and a weaker yen drive up energy, food and other import costs. The data should reinforce the Bank of Japan’s view that underlying inflation is moving toward 2% and keep it on track to reduce stimulus.”Click here to read the full reportThe yen’s weakness has been a factor keeping inflation elevated via costlier imports of food and energy. Authorities intervened in the market Thursday during New York trading hours to bolster Japan’s currency, according to a market participant with knowledge of the matter, sending it as much as 3.3% higher versus the dollar. It was trading around 160.15 per dollar Friday morning in Tokyo.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.“I don’t think the impact of intervention will last very long,” Minami said. “I believe the current weakness of the yen is largely due to concerns about Japan’s fiscal situation rather than interest rate differentials, so even if the BOJ adopts a slightly more hawkish stance, I don’t think the trend toward a weaker yen will change.”Food prices continue to rise steadily, with processed food costs increasing 3.9% from a year earlier. In a bright spot, rice prices fell 8.4% from a year earlier after soaring more than 100% in the spring of 2025. Prime Minister Sanae Takaichi will proceed with plans to lower the sales tax on food and soft drinks to 1% for two years starting in April 2027, a senior official in the Liberal Democratic Party said Thursday.Among other components, housework consummables rose 5.3% on year and service price growth — a key indicator of demand-driven inflation — accelerated marginally to 1.2%. The jobless rate held steady at 2.5% in June, the Ministry of Internal Affairs reported. The job-to-applicant ratio inched higher to 1.18 in June from 1.17 a month earlier, meaning there were 118 jobs offered for every 100 applicants, the Labor Ministry reported.(Updates with economists’ comments.)Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.