Japan's core inflation rate rose 3.2% year on year in September 2026, reaching its highest level since October 2023. Corporate services prices rose 3.7% in September, while ocean freight costs surged 97.7%. The data may provide the Bank of Japan with grounds to continue raising rates and inform its policy decisions.
According to data released by the Bank of Japan, Japan's core inflation rate rose 3.2% year on year in September 2026, up from 2.6% in August and reaching its highest level since October 2023. This suggests that price pressures may be broadening and is being viewed as grounds for the Bank of Japan to continue raising rates in the near future.
Corporate services prices also rose 3.7% in September, following a 3.5% increase in August. Ocean freight costs surged 97.7%. The rise in fuel import costs caused by the weaker yen and worsening conditions in the Middle East is believed to be one factor.
Ahara Kenichiro (阿原 健一郎) of Dai-ichi Life Research Institute points out that companies are offsetting higher labor costs arising from wage negotiations by raising service prices. There is also a view that inflationary pressure is steadily building in labor-intensive industries.
The Bank of Japan has created its own underlying inflation index to assess price increases driven by domestic demand, excluding subsidies and temporary factors, while the government's core consumer price index excludes fresh food. The Bank of Japan's next monetary policy meeting is scheduled for 30 October. The policy rate is expected to remain at 1.25%, but the possibility of an additional rate hike remains.