# Japan's core inflation rises above the Bank of Japan's 2% target for the first time in nine months

Business & Markets · 23 October 2026 · Tokyo, Japan
URL: https://connectthedots.news/event/2026-10-23-japans-core-inflation-rises-above-the-bank-of-japans-2-target-for-the

> Japan's core consumer prices rose 2.1% in September, above the BOJ's 2% target, driven by fuel costs from the Middle East conflict and a weak yen.

Japan's core consumer price index, which excludes fresh food but includes fuel, rose 2.1% in September from a year earlier, up from 1.7% in August and in line with forecasts, Reuters reported. It was the first time in nine months that the measure exceeded the Bank of Japan's 2% target. [1]

An index that also strips out fuel, which the BOJ watches as a gauge of demand-driven prices, rose 2.4% after 1.9% in August. Reuters attributed the pressure to higher fuel costs from the prolonged Middle East conflict, import prices lifted by the weak yen and strong AI-related demand, partly offset by government fuel subsidies. [1]

The BOJ raised its key rate to 1.25%, a 31-year high, in September. Governor Kazuo Ueda has warned that underlying inflation may overshoot the target. Reuters, citing sources, said the BOJ is expected to hold rates at its meeting next week but may raise its inflation forecast. [1]

The yen traded near 157 per dollar after bouncing from a one-month low, with traders watching for possible currency intervention, FXStreet reported. [2]

## Who was involved

- [Bank of Japan](https://connectthedots.news/org/bank-of-japan): Inflation above its target strengthens the case for further hikes [1]
- [Kazuo Ueda](https://connectthedots.news/person/kazuo-ueda): Has warned underlying inflation may overshoot 2% [1]

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## Sources

1. Reuters (via The Star), "Japan core inflation exceeds BOJ target, cements near-term rate hike chance", 23 October 2026: https://www.thestar.com.my/business/business-news/2026/10/23/japan-core-inflation-exceeds-boj-target-cements-near-term-rate-hike-chance
2. FXStreet, "USD/JPY Forecast: Bounce from one-month low; BoJ bets to cap gains", 23 October 2026: https://www.fxstreet.com/news/usd-jpy-price-forecast-recovers-further-from-one-month-low-retakes-15700-on-firmer-usd-202610230756