| Consensus | Consensus Range | Actual | Previous | Revised | |
| CPI - Y/Y | 2.7% | 2.4% to 2.9% | 2.8% | 2.7% | |
| Ex-Fresh Food - Y/Y | 2.7% | 2.4% to 2.8% | 2.6% | 2.7% | |
| Ex-Fresh Food & Energy - Y/Y | 2.8% | 2.5% to 3.0% | 2.6% | 3.0% | 2.9% |
Highlights
Consumer inflation in Tokyo, a leading indicator of the national trend, remained high in October after surging in September when the metropolitan government’s water subsidies for the peak summer months ended for some households and the price-cutting base-year effect of free daycare services waned. Nationwide subsidies for fuels and utilities (electricity and natural gas) are still keeping energy prices below year-earlier levels, providing a slight downward pressure.
All three key CPI measures are above the Bank of Japan’s 2% price stability target. Without the effects of fiscal support programs for households, inflation is expected to stay elevated for now. High energy, import and labor costs are forcing firms in many sectors to raise prices. The Mideast conflict lingers on while the yen remains under year-earlier levels, eroding Japan’s purchasing power.
The core measure (excluding fresh food) stood at 2.6% on year after surging to a 10-year high of 2.7% in September from 1.8% in August. The core rate hit a recent peak at 3.6% in May 2025 when processed food price hikes were sharp in the aftermath of domestic rice shortages.
The annual rate of the total CPI also edged up to a 15-month high of 2.8% in the capital after soaring to a 10-month high of 2.7% in September from 1.9% in August. The year-on-year increase in the core-core CPI (excluding fresh food and energy), which is not directly impacted by fuel and utility subsidies, was at 2.6% after jumping to a 13-month high of 2.9% (revised down from 3.0%) in September from 2.0% previously.
At its Oct. 29-30 meeting, the Bank of Japan’s nine-member board is expected to leave the target for the overnight interest rate at 1.25% after raising it to the level from 1% in September amid growing upside risks to inflation. The board is also expected to repeat its recent statement that the bank will continue to raise the policy interest rate toward a more neutral level.
BOJ policymakers are mulling over the timing of the next rate hike by watching the three main risk factors: the impact of the Mideast conflict, strong global demand to develop artificial intelligence and fluctuations in foreign exchange rates. Many market participants expect the bank to raise the policy rate at its next meeting on Dec. 17-18 after confirming whether the economy remains resilient despite the drag from the protectionist U.S. trade policy, the Iran war and natural disasters.
Details:
Japan Oct Tokyo core CPI (ex-fresh food) +2.6% y/y (Sept +2.7%); median forecast +2.7% (range: +2.4% to +2.8%)
Japan Oct Tokyo total CPI +2.8% y/y (Sept +2.7%); median forecast +2.7% (range: +2.4% to +2.9%)
Japan Oct Tokyo core-core CPI (ex-fresh food, energy) +2.6% y/y (Sept +2.9%); median forecast +2.8% (range: +2.5% to +3.0%)
Japan Oct Tokyo inflation rate stays high after surging in Sept when price-cutting effects of free basic water charges waned at end of program
Japan Oct Tokyo CPI: energy +2.2% y/y (+0.09 point contribution), vs. -1.9% (-0.08 point) in Sept
Japan Oct Tokyo CPI: processed food +3.0% (+0.71 point) vs. +3.6% (+0.83 point) in Sept
Market Consensus Before Announcement
Consumer inflation in Tokyo, a leading indicator of the national trend, is expected to stay buoyant in October. After the three key inflation figures rose sharply above the Bank of Japan’s 2% target for the first time in nine months in September, they are expected to be little changed or slightly decelerate, holding near 3% for the second straight month.
The general uptrend in prices remained in place as tensions in the Middle East kept international oil and raw material prices elevated, while the yen’s weakness continued to push import costs higher. Higher labor, material, transportation and other costs have been passed on to consumers through price increases across a wide range of goods and services, bolstering inflation.
In September, Tokyo’s CPI rose more than expected as the metropolitan government’s water subsidies for the peak summer months ended for some households and the price-cutting effects of free daycare services were slightly reduced. The trend is expected to continue in October, although the three key CPI readings are forecast to stay near their previous levels following the unexpected jump in September.
The core CPI, which excludes fresh food, is forecast to rise 2.7 percent on the year in October, little changed from a month earlier. The total CPI is expected to rise 2.7 percent, also flat from the previous month. The core-core index, which excludes both fresh food and energy, is expected to rise 2.8 percent, down from a 3.0 percent increase in September. That marked the first time since August 2025 that the index had reached the 3 percent mark.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Annual changes in the CPI represent the rate of inflation.
The Tokyo CPI data covers consumer prices in the capital’s 23 wards located in the eastern part of the Tokyo Prefecture but excludes the 26 cities and other smaller municipalities that occupy larger areas in other parts of the province (islands in the Pacific Ocean are also excluded). It is a leading indicator of the national average CPI as it is released about a month ahead of the national data. The survey for the Tokyo CPI is conducted on one day around the 12th (Wednesday, Thursday or Friday) each month and its results are released toward the end of the same month or early in the following month.
The national CPI has a larger energy weight of 712 out of 10,000, compared to 470 in the Tokyo data, because the shares of consumption of electricity, gasoline and heating oil tend to be bigger in the rural areas. There is only a slight difference in the weighting of food excluding perishables between the national data (2,230) and the Tokyo data (2,144).
Description
The CPI has been in the spotlight as Japan struggled to make its way out of deflation. It is now closely monitored because the recent spike in energy and commodity markets and supply chain constraints during the global pandemic boosted Japan’s inflation rate to the highest in over four decades in 2022.
The report tracks changes in the price of a basket of goods and services that a typical Japanese household might purchase. The preferred measure is the year over year percent change. Markets will typically pay more attention to the core measure that excludes only fresh food because volatile food prices can distort overall CPI. A second core measure that excludes energy as well is also available. As the most important inflation indicator, the CPI data are closely monitored by the Bank of Japan. Rising consumer prices may prompt the BoJ to raise interest rates in order to manage inflation and slow economic growth. Higher interest rates make holding the yen more attractive to foreign investors, and this higher level of demand will place upward pressure on the value of the yen.
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.