Tokyo's September CPI rose 2.7% year on year on an all-items basis, while the increase was approximately 7.0% excluding fresh food, and the Bank of Japan's core measure accelerated to 3.0%. The data indicate that inflationary pressure is continuing to build even after excluding the effects of the government's electricity and gas support and the impact of free nursery fees.
According to the Ministry of Internal Affairs and Communications, Tokyo's September CPI, excluding fresh food, rose 2.7% year on year, accelerating from 1.8% in the previous month. The seasonally adjusted month-on-month increase was also high at 0.9%, while the Bank of Japan's core measure, which excludes fresh food and energy from the all-items index, rose to 3.0% year on year and the US-style core measure increased to 2.7%. The impact of special factors needs to be taken into account, but the data suggest that underlying inflationary pressure may be strengthening.
As price increases spread, particularly among goods, electricity and gas costs are contributing to the year-on-year change despite the impact of subsidies. It is important to bear in mind that the end of subsidies from November onward and the pass-through of energy costs could again emerge as sources of upward pressure. The increase in household goods prices remains elevated, while price rises for durable goods are also conspicuous.
Although falling rice prices are weighing on food prices, the increase in food prices excluding fresh food remained at 3.6%. Price increases are advancing for meat, fats and oils, seasonings, beverages and prepared foods, indicating strong upward pressure across items other than rice. Prices of household goods continue to rise, driven by consumables, while durable goods including information-related equipment such as tablet devices have also become more expensive. Service prices are on an upward trend overall, but the impact of nursery fees has not yet run its course, so caution is needed in assessing the underlying trend.
Looking ahead, inflation is likely to be influenced by the pass-through of higher costs downstream, stronger price pass-through, the timing of the end of electricity and gas support, and fuel prices. With uncertainty surrounding the situation in the Middle East and the risk of higher crude oil prices, upward pressure is expected to continue, particularly in food, household goods and energy. The outlook suggests that nationwide core CPI may resume rising and reach above 3% between the end of 2026 and early 2027.