Tokyo inflation accelerates, supporting further interest rate hikes by the Bank of Japan.

Key inflation indicators in Tokyo accelerated for the first time in eight months, which will keep the Bank of Japan on track for further interest rate hikes. Data released on Friday showed that the consumer price index in Tokyo, excluding fresh food, rose by 1.6% year-on-year in June, in line with previous forecasts. The CPI, excluding fresh food and energy prices, increased by 1.9%, which is the core inflation indicator closely monitored by the Bank of Japan. Overall CPI rose by 1.7%. The Tokyo CPI is considered a leading indicator of national price trends in Japan. The rise in CPI was mainly driven by an increase in water prices after subsidies were cut. Energy prices continued to decline, thanks to Prime Minister Sanae Takaichi's gasoline subsidy policy. The acceleration in CPI reflects policymakers' concerns about rising inflation risks. While Japanese inflation data has so far been restrained by temporary government measures aimed at lowering living costs, the data released on Friday will support the Bank of Japan's stance on raising interest rates.