Japan: Inflation comes in at highest level since October 2023 in August
Latest reading: Inflation came in at 3.0% in August, which was up from July’s 2.8%. August’s figure marked the highest inflation rate since October 2023. The acceleration was driven by a steep increase in prices for electricity and gas after the end of energy subsidies in May. In addition, price pressures accelerated for food.
The trend was unchanged, with annual average inflation coming in at July’s 2.8% in August. Meanwhile, core inflation—the Bank of Japan’s (BOJ) main inflation gauge—ticked up for the fourth consecutive month to 2.8% in August from July’s 2.7%, matching expectations and remaining above the BOJ’s 2.0% target for the 29th consecutive month.
Lastly, consumer prices rose 0.52% from the previous month in August, accelerating from the 0.36% rise seen in July. August’s figure marked the highest reading since October 2023.
Panelist insight: ING analysts said:
“The pickup in August was mostly due to base effects related to the utility subsidy programme. It was also already signalled by earlier Tokyo inflation data, so we believe it is not market-moving. More important to watch will be inflation for September and October. Consumer inflation is expected to ease again in September due to re-starting utility subsidies, but October is usually the month for price rises for the 2nd half of the year.”