The Bank of Japan's trend inflation index rose 3.2% in September from a year earlier, its fastest pace in three years, while services producer prices rose 3.7%, ahead of the bank's policy meeting ending Friday.
Japan's underlying inflation pressures broadened in September, with the Bank of Japan's trend inflation index rising at its fastest annual pace in three years.
The index, which strips out one-off institutional factors such as education and energy-related subsidies, rose 3.2% in September from a year earlier, accelerating from 2.6% in August and marking the biggest year-on-year rise since October 2023. A separate Bank of Japan gauge showed services producer prices, which track what companies charge each other for services, up 3.7% in September from a year earlier, following a revised 3.5% gain in August. The data arrive ahead of the bank's two-day policy meeting ending on Friday, when it is expected to keep interest rates steady at 1.25% while signalling readiness to keep raising borrowing costs.
The index is compiled by the bank to gauge price moves driven by domestic demand, and it differs from the government's core consumer price index, which excludes volatile fresh-food costs but does not strip out subsidies and other government steps. That distinction matters: the government's core measure stood at 2.1% in September, so the 3.2% trend figure is a different gauge, not a revision of the earlier number. Kenichiro Ahara, an economist at Dai-ichi Life Research Institute, said the data showed companies passing on prices at the business-to-business level, reflecting the strong outcome of this year's wage negotiations.
The figures come directly from Bank of Japan data as reported by Reuters, and the September readings are confirmed across the two gauges. What the data do not settle is the timing of the next rise: the bank is expected to hold this week, so the figures strengthen the case for further tightening without themselves announcing it.
Friday's meeting statement and the bank's language on mounting inflation risks will therefore be the next real test, with markets watching for any shift in tone that turns a broadening trend into a timetable.