Japan’s core consumer inflation slowed to 2.7% y/y in August, matching forecasts and easing from 3.1% in July, though still above the Bank of Japan’s 2% target.
An index that strips out both fresh food and fuel — closely watched as a gauge of underlying inflation — rose 3.3% y/y, down slightly from 3.4% in July.
The data provide some relief for households but remain strong enough to keep the BoJ cautious. Policymakers conclude their two-day meeting on Friday and are widely expected to leave rates at 0.5%. Governor Kazuo Ueda has stressed the need for patience given uncertainty over the impact of U.S. tariffs on Japan’s economy. The BoJ expects near-term price pressures from food and imports to fade, with wage growth and consumption gradually supporting more durable inflation.
Still to come today, the Bank of Japan:
- Preview - BoJ seen keeping rates at 0.5% as tariffs, U.S. slowdown weigh on outlook
