Japan's Inflation Slows Slightly but Remains Above Central Bank Target

October's inflation data supports predictions of a potential Bank of Japan rate hike in December as policymakers focus on sustained wage-driven growth.

• Japan's core consumer price index (CPI), excluding fresh food, rose 2.3% year-on-year in October, down from 2.4% in September but above the 2.2% forecast by economists.
• An alternative inflation measure, excluding both fresh food and energy, increased to 2.3% in October from 2.1% in September, signaling persistent demand-driven inflation.
• The Bank of Japan (BOJ) has indicated readiness to further raise interest rates if inflation and wage growth trends remain consistent with its targets.
• A majority of economists surveyed expect the BOJ to increase its short-term policy rate from 0.25% to 0.5% during its December meeting.
• BOJ Governor Kazuo Ueda has emphasized the importance of achieving durable wage-driven inflation, suggesting the policy rate could reach 1% by late fiscal 2025 if economic conditions align with expectations.

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