Japan’s headline inflation rose to a 10-month high of 2.1% YoY in September 2026, breaching the Bank of Japan ’s (BoJ) 2% target due to imported inflation and a weak Yen. Crucially, core inflation surged to 2.4% YoY, indicating that underlying price pressures are broadening. Persistent wage growth and the expiration of energy subsidies threaten to trigger a wage-price spiral. Consequently, the BoJ is expected to advance its policy normalization with a 25 bps rate hike in 2026 and another in 2027.