(Bloomberg) -- Japan’s consumer inflation outpaced expectations in data published hours ahead of the central bank’s policy decision, casting some doubt over the Bank of Japan’s price outlook. Most Read from BloombergEx-Goldman Bankers Make a Fortune With Controversial Bet on CoalIndia Suspends Visas, Canada Pulls Diplomats Amid Tensions‘Dead Space’ Co-Creator Departs Startup After Newest Game FlopsWall Street Trading Roiled by ‘Post-Fed Hangover’: Markets WrapRupert Murdoch to Leave Helm of Empi
Consumer prices excluding fresh food rose 3.1% from a year ago in August, unchanged from the previous month, the internal affairs ministry reported Friday. Energy dragged more on prices while hotel fees boosted them, with gains in processed food costs continuing to be the biggest factor behind inflation. Analysts had expected the reading to slow to 3.0%.
The unchanged pace of price gains calls into question the BOJ’s view that inflation will peak later this year and fall back below its 2% target in the following years. The central bank has relied on its price projections to explain why it needs to keep its ongoing ultra-easy policy settings. Still, BOJ watchers expect no change in policy settings later today. The central bank is closely monitoring data for clues on whether inflation is finally getting on a sustainable path accompanied by healthy wage growth.
Now a rebound in oil prices and a drop in the yen are throwing a wrench into the inflation dynamics because both developments make imports more expensive and hit consumers. More than 6,600 food items are expected to see price hikes in September and October, according to a report by Teikoku Databank. The yen also continues to be weaker than the level a year ago that prompted authorities to intervene in markets to prop up the currency.
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