Tokyo inflation accelerates, well above the Bank of Japan's target

As the effects of some temporary government policies faded, Tokyo's core inflation gauge rose sharply, reinforcing the Bank of Japan's stance that it will continue raising its benchmark interest rate after accelerating the pace of policy normalization. Data released Friday by Japan's Ministry of Internal Affairs and Communications showed that Tokyo's consumer price index excluding fresh food rose 2.7% year-on-year in September. That was above the median economist estimate of 2.3%, following a 1.8% increase last month. Tokyo's expanded childcare subsidies and summer water bill relief measures had previously pushed down the inflation gauge, so the market widely expected an acceleration in this reading. The surge in CPI confirms the Bank of Japan's concern: upside inflation risks may push the underlying price trend above the 2% target.