Core consumer prices in Tokyo’s central wards rose 2.7% yoy in September 2026, following a 1.8% gain in August and exceeding expectations of 2.4%. It was the fourth straight month of acceleration and marked the fastest increase since November 2025, signaling broadening price pressures stemming from the Middle East conflict. Inflation rose above the BoJ’s 2% target for the first time in nine months, driven by higher oil prices amid the Middle East conflict, despite the government raising subsidies on regular gasoline. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, rose 3.0% yoy, up from 2.0% in August, marking the highest reading in 13 months. The BoJ raised its policy rate by 25 bps to 1.25% at its September meeting, the highest level since April 1995, in response to persistent inflation driven by higher oil prices amid the ongoing Middle East conflict.