August Tokyo Core CPI Rises 1.8% Year-on-Year, Accelerating for Third Straight Month but Below 2% for Seventh Consecutive Month — BigGo Finance

Japan’s Ministry of Internal Affairs and Communications released August Consumer Price Index data for Tokyo’s 23 wards (mid-month preliminary figures, 2025=100) on the 28th. The index excluding fresh food, which is subject to significant price swings, came in at 102.3, up 1.8% from a year earlier. The pace of increase widened by 0.1 percentage point from July’s 1.7%, marking a third consecutive month of acceleration.

This marks the seventh consecutive month that the figure has fallen short of the 2% target set by the Bank of Japan. While the reading slightly exceeded market expectations of 1.7%, it remains at a level that still leaves considerable distance from achieving the target.

The primary factor pushing prices higher was the rise in food prices excluding fresh food. Meanwhile, the overall index for Tokyo’s 23 wards rose 1.9% year-on-year, and the index excluding fresh food and energy climbed 2.0% from a year earlier.

The Tokyo 23-ward index is closely watched as a leading indicator of nationwide price trends. The index excluding fresh food, which is prone to weather-driven price volatility, is considered particularly important for gauging underlying price movements.

The latest results indicate that underlying inflation, which the Bank of Japan uses as a key input for policy decisions, still lacks the strength needed for a sustained achievement of the 2% target. While the third consecutive month of accelerating growth suggests a gradual buildup of inflationary pressure, the level itself remains below the target.

Looking ahead, market attention will focus on whether wage increases spill over into services prices, in addition to the impact of cost factors including energy prices and currency movements. The Bank of Japan has signaled it will proceed with policy management while confirming a virtuous cycle between prices and wages, and the latest Tokyo core CPI figures will serve as one of the key inputs in that assessment.