Tokyo's core CPI for the 23 wards, released by the Ministry of Internal Affairs and Communications, surged 2.7% year on year in September. Core-core CPI accelerated to 3.0%, strengthening expectations for an additional Bank of Japan rate hike.
Tokyo's September consumer price index (CPI) for the 23 wards, the preliminary mid-month reading released by the Ministry of Internal Affairs and Communications, rose 2.7% year on year on a headline basis excluding fresh food. The figure exceeded the market forecast of 2.4%, with the rate of increase widening by 0.9 percentage points from 1.8% in August. Core-core CPI also accelerated to 3.0% year on year, entering the 3% range for the first time since August 2025. The headline index also rose month on month, reaching its highest level since November 2025.
The rise has been attributed in part to the fading impact of policy measures that had pushed prices down, such as the Tokyo metropolitan government's waiving of basic water charges and free childcare for first children. Companies are also increasingly passing on higher energy and raw-material costs resulting from heightened tensions in the Middle East to selling prices. There is also a view that rising wholesale prices have affected the figures.
The mid-month preliminary reading for the 23 wards is regarded as a leading indicator that anticipates nationwide price trends and may inform the Bank of Japan's new price outlook at its monetary policy meeting later this month. Although the BOJ maintains a 2% price stability target, it continues to take a cautious approach to assessing whether a virtuous cycle between wages and prices is strengthening.
Fuel subsidies had helped suppress core CPI to some extent, but wholesale prices have risen markedly recently. A growing view holds that intensifying conflict in the Middle East, yen depreciation and increased demand associated with stronger AI-related investment are pushing up companies' procurement costs and increasing pressure to pass those costs on to prices.