Core consumer inflation in Japan accelerated to 2.8% in August, according to government data released on Tuesday, marking the fastest annual pace in nearly eight years and exceeding the 2% target set by the central bank for the fifth consecutive month.
This was the outcome of raw material price pressure and yen weakness.
Analysts polled by Reuters predicted a 2.7% increase, and consumer prices gained 2.4% in July.
With this report, the Bank of Japan is not likely to shift its policy this Thursday, despite the increased inflation rate. Haruhiko Kuroda, the bank’s governor, has frequently stated that interest rates will remain extremely low until wage hikes make inflation more manageable.
“The weak yen is importing inflation into Japan. Core consumer inflation is set to top 3% in October,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Inflation may stay above 2% for another year or so. That could prod the BOJ to change the way it looks at prices,” he said.