Core inflation in Japan rises to highest level in 8 years

TOKYO (Reuters) – Japan’s core consumer inflation, adjusted for volatile prices, has reached its highest level in eight years.

It rose to 2.8 percent, according to data released on Tuesday.

Despite core inflation being above the Bank of Japan’s target of 2% for five straight months, analysts say the Bank of Japan is unlikely to hike interest rates any time soon as wage and consumption growth remain weak.

Headline inflation in Japan hit 3 percent in August, the highest since 1991. The Bank of Japan has pledged to keep interest rates extremely low and remains an outlier in a global wave of monetary tightening.

The world’s third-largest economy grew by an annualized 3.5 percent in the second quarter, stronger than experts had estimated. However, the recovery has been slower than in many other countries as a resurgence in COVID-19 infections, supply shortages and rising commodity costs weighed on consumption and production.

(Report by Leika Kihara and Takahiko Wada, written by Esther Blank. If you have any questions, please contact our editorial team at [email protected] (for politics and economics) or [email protected] (for companies and markets ).)

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