The underlying inflation in Japan, which excludes the effect of fresh food prices, accelerated in September to 2.1% year-on-year, four tenths higher than in August and thus marking its largest increase since December 2025, according to data released by the Ministry of Internal Affairs and Communications.
This advance of the reference CPI in September reinforces expectations of a new increase in the official interest rate by the Bank of Japan at the meeting to be held next week, after raising the cost of money to 1.25% last September.
In parallel, the general inflation of the country also stood at 2.1% year-on-year in the ninth month of the year, above the 1.9% recorded in August. In turn, the expanded underlying inflation index, which in addition to fresh food excludes the impact of energy, rose to 2.4% from 1.9% the previous month, chaining its largest increase since March.
Regarding the composition of the index, fresh food recorded a price increase of 2.1% on an annual basis in September, well below the 6% recorded in August and constituting its smallest advance since April, while energy became cheaper again, with a drop of 0.6% after the decrease of 0.7% the previous month.
In its September meeting, the Monetary Policy Council of the Bank of Japan agreed to raise the reference interest rate by 25 basis points to 1.25%, its highest level since 1995, and also revised its inflation projections, which now contemplate an acceleration of the CPI above 2% in the second half of the fiscal year.