According to Jinshi Data, Japan's Tokyo CPI annual rate in August was higher than expected, sparking speculation that the Bank of Japan will raise interest rates again soon. Tokyo CPI is seen as a leading indicator of national inflation.
Marcel Thieliant, head of Asia Pacific at Capital Economics, said underlying inflation is still expected to fall below 2% in the coming months, but the latest Tokyo CPI data suggests there are some upside risks to this forecast.
Separate government data showed industrial output rebounded sharply in July, with a recovery in car production driving the rebound. Higher inflation and improving economic activity will fuel expectations that the Bank of Japan will raise interest rates again in the near future.
Bank of Japan Governor Kazuo Ueda and other senior officials have also recently said they would consider further rate hikes as long as data confirms that the economy and inflation are rising in line with expectations.
