A customer checks vegetables and other groceries at a supermarket in Tokyo, June 20, 2025.
Kazuhiro Nogi | AFP | Getty Images
Japan’s core inflation rate in October was in line with market expectations on Friday, marking the sharpest rise since July, confirming the Bank of Japan’s rationale for raising interest rates.
Core inflation, which excludes the price of fresh food, came in at 3%, in line with economists’ estimates compiled by Reuters.
The headline inflation rate rose to 3%, exceeding the Bank of Japan’s 2% target for 43 consecutive months.
So-called “core-core” inflation, which excludes fresh food and energy prices, rose to 3.1% from 3% in September.
The rice inflation rate continued to ease for the fifth consecutive month, dropping to 40.2% from 49.2% in the previous month.
Japanese Nikkei Stock Average The yen weakened 1.58% and rose 0.1% to trade at 157.5 yen against the dollar, as senior Japanese officials expressed concern about the currency’s movements.
Bank of Japan Governor Kazuo Ueda told the Diet on Friday that the central bank should keep in mind that a weaker yen could affect underlying inflation by pushing up import costs and overall prices.
Reuters reported that Japan’s Finance Minister Satsuki Katayama expressed urgency about the weak yen, saying, “We are wary of the recent unilateral and sudden movements in the foreign exchange market,” and hinting at the possibility of market intervention.
The dollar has appreciated 2.19% against the yen so far in November, but has risen 9.52% in the past six months, according to LSEG data.
Earlier this week, Ueda also held his first bilateral talks with newly elected Prime Minister Sanae Takaichi.
According to Reuters, Ueda told Takaichi during the meeting that the central bank is “raising interest rates in stages to smoothly guide the inflation rate towards the 2% target and enable the economy to achieve sustainable growth.”
Takaichi has long supported accommodative monetary policy, telling parliament earlier this month that he wanted the Bank of Japan to “manage policy appropriately” so that the 2% inflation target was achieved through wage increases rather than cost-increasing factors.
Takaichi reportedly said, “The current inflation is not good.” The BOJ governor also said that he had not received any requests regarding monetary policy from Mr. Takaichi.
The central bank is currently caught in the middle as inflation is above target and GDP growth is slowing as Japan is hit by U.S. tariffs.
Japan’s GDP in the three months to September contracted for the first time in six quarters, down 0.4% from the previous quarter, or at an annualized rate of 1.8%.
