Japan’s core August inflation slows to 1.7%

Japan's core inflation rate decelerated to 1.7% in August, data revealed on Friday, just prior to a central bank meeting. The Bank of Japan (BoJ) is aiming to temper inflationary pressures by targeting a 2% rate. The figure from the internal affairs ministry, which excludes volatile fresh food prices, was lower than market expectations, which had anticipated it to remain stable at 1.8%.

Government subsidies for gasoline and electricity fees were cited as reasons for the slower inflation rate. Some members of the BoJ have indicated they may raise the key interest rate by 0.25 percentage points to 1.25%, the highest level in over three decades. Rising oil prices due to the Middle East crisis, which shows no signs of abating, and the weak yen are also contributing to the upward pressure on inflation.