Japan core inflation hits nine-month high in September, tops BOJ target

Japanese consumer inflation rose as expected in September. Core inflation hit a nine-month high and crossed the Bank of Japan's annual target as energy costs and a soft yen kept pressure on prices.

Core consumer price index inflation, which excludes volatile fresh food prices, rose 2.1% year-on-year in September, data from the Statistics Bureau showed on Friday. The reading was the strongest since December 2025, matched expectations and accelerated from 1.7% in the prior month.

Underlying inflation also climbs

A core reading that excludes both fresh food and energy prices jumped to a 10-month high of 2.5%, from 2.0%. The Bank of Japan closely watches this measure as a gauge of underlying inflation.

Headline CPI rose 2.1% year-on-year in September, from 1.9% in the prior month. Inflation was largely broad-based.

Energy, supply chains and yen

Rising business costs due to high energy prices and other global supply chain disruptions trickled down into consumer prices. Japanese producer inflation hit a 3-1/2 year high earlier this year.

A soft yen also factored into higher inflation, especially as Japan's import costs increased.