Bank of Japan's inflation indicator signals pressure increase

The weighted median inflation rate is monitored closely as an indicator of expansion or contraction in price growth. In October, this indicator reached a record 1.1% in Japan. This shows the rising cost of raw materials and labor, which adds to inflationary pressures.

Reuters informs that in case of salary increases combined with inflation next year, the data will support market expectations of a possible change in the Bank of Japan's (BOJ's) ultra-low interest rates.

Fuel and energy costs affect the consumer price index (CPI), but not the weighted median inflation rate. It indicates the extent of price increases.

Bank of Japan policy makers are focusing more on the weighted average level due to the inaccuracy of inflation data caused by rising fuel and commodity prices. It helps to determine the stability level of the recent rise in inflation after the fade of the one-time impulse from a sharp rise in fuel prices.