Tokyo Inflation Continues to Climb Above BOJ Target Despite Utility Subsidies

Tokyo’s core consumer prices increased in August, exceeding the Bank of Japan’s 2% inflation target, despite easing year-over-year due to government fuel subsidies. This continued upward trend suggests that the Bank of Japan will face a difficult decision regarding its next interest rate hike. Meanwhile, factory output dropped and retail sales failed to meet expectations, highlighting economic fragility as U.S. tariffs add pressure. Analysts anticipate further tightening from the BOJ as inflationary pressures persist, even as they acknowledge potential risk to growth from increased rates and lingering impacts of US tariffs.