Japan’s Tokyo CPI core (excluding fresh food) slowed from 2.4% yoy to 2.0% yoy in September, aligning with expectations and marking its lowest level since May. Headline CPI dropped to 2.2% yoy from 2.6% yoy , while CPI core-core (excluding food and energy) remained stable at 1.6% yoy.
The primary driver of the deceleration in inflation was reduction in electricity and gas prices, influenced by government energy subsidies reintroduced by outgoing Prime Minister Fumio Kishida. These subsidies helped alleviate the impact of a particularly hot summer, shaving 0.5 percentage points off overall inflation.
This data, especially the stable core-core inflation, supports BoJ’s cautious stance regarding more tightening. BoJ Governor Kazuo Ueda recently noted that inflationary risks have diminished, particularly with Yen’s recent gains. BoJ is likely to remain on hold during its upcoming policy meeting on October 31.
 slowed from 2.4% yoy to 2.0% yoy in September, aligning with expectations and marking its lowest level since May. Headline CPI dropped to 2.2% yoy from 2.6% yoy , while CPI core-core (excluding food and energy) remained stable at 1.6% yoy.){kind=link}