Despite reaching an eight-year high of 3% in September, Japan's central bank is not going to change its accommodative monetary policy.
Both the consumer price index and core inflation, which includes volatile food costs, increased by 3% in September from a year earlier, according to official numbers issued on Friday. It was the highest gain since August 1991, excluding the effects of tax increases in 2014. The reading matched what the market had predicted.
Prices have risen on the back of the weakening of the yen, which on Thursday slipped past ¥150 against the dollar for the first time in 32 years, and rising costs of imported food and energy. September marked the sixth consecutive month that core CPI exceeded the longstanding target of 2 per cent set by the Bank of Japan
However, the central bank, which has been working for years to get the economy of the nation out of a deflationary cycle, has been hesitant to raise interest rates. The BoJ has stated that the economy's fundamental demand is remains weak and that there has been no pass-through of higher prices to higher salaries.
