Investing.com-- Japan consumer price index inflation grew slightly more than expected in September as underlying inflation remained sticky, although the headline figure still fell from 10-month highs.
Core CPI, which excludes volatile fresh food items, grew 2.4% year-on-year in September, government data showed on Friday. The reading was higher than expectations of 2.3%, but eased from the 2.8%- a 10-month high- seen in the prior month.
A core reading that excludes both fresh food and energy prices, and is watched closely by the Bank of Japan as a gauge of underlying inflation, rose to 2.1% in September from 2% in the prior month.
Headline CPI inflation fell to 2.5% from 3% in the prior month.
Friday’s reading comes amid some doubts over just how much headroom the BOJ will have to keep raising interest rates, as private spending now appeared to be tapering off after increasing sharply earlier this year.
Changes in Japan’s leadership are also expected to stymie the BOJ’s plans to increase interest rates. New Prime Minister Shigeru Ishiba recently said that Japan was not ready for another rate hike
Still, the increase in underlying inflation indicated that inflation was still likely on track to hover around the BOJ’s 2% target. Inflation picked up steadily this year on the back of bumper wage hikes won by Japanese unions earlier this year, which boosted consumption.
The BOJ had kept interest rates steady during a September meeting, but forecast inflation remaining sticky and on track to reach its 2% annual target rate sustainably.