Recent September 2026 data showed Japan’s core CPI (excluding fresh food) rising 2.1% year-over-year, the first reading above the Bank of Japan’s 2% target in nine months and matching forecasts, while the core-core measure excluding fresh food and energy accelerated to 2.4%. Persistent pressures from a weak yen elevating import costs, higher energy prices tied to Middle East tensions, and broadening pass-through into goods and services inflation have supported this trajectory. The Bank of Japan’s September rate hike to 1.25% and signals of further tightening reflect these dynamics, with the next policy meeting eyed for potential forecast revisions. Market-implied odds heavily favor a 2.0-2.4% annual outcome for 2026 as trader consensus incorporates these factors alongside expectations of eventual moderation.