The Ministry of Internal Affairs and Communications of Japan released the latest inflation data on a certain date, showing that Japan's year-on-year increase in prices in the month was 3.3%, a decrease of 0.1 percentage points compared to the previous month; the core year-on-year increase, excluding fresh food, was 3.6%, a decrease of 0.2 percentage points compared to the previous month, indicating a slight easing of Japan's inflationary pressure.

Cao Hongyu, a researcher at the Bank of China Research Institute, believes that although Japan's inflationary pressures have eased somewhat, the Bank of Japan's path to raising interest rates remains cautious. The Japanese government's resumption of subsidies for electricity and gas fees has contributed to a cooling in Japan's inflation in recent months.

After experiencing continuous expansion for several months, Japan's core inflation saw a moderation in the month, primarily due to the Japanese government resuming subsidies for electricity and gas fees in the month. Previously, affected by the international energy price surge caused by the Ukraine crisis, the Japanese government began providing subsidies for electricity and urban gas fees from January of the year, which continued until the month of the year. However, from the month onwards, Japan's core inflation increased consecutively for several months, with rising energy prices being the main driving factor.

The year-on-year increase in electricity and gas bills in Japan reached .% and .%, respectively, in a certain month. Between July and August, Japan's energy consumption grew by .% year-on-year for two consecutive months, reaching the highest level since January of a certain year. To help residents alleviate the burden of energy prices, the Japanese government resumed subsidies for electricity and gas fees from a certain month to a certain month. As a result of this measure, the prices of electricity and gas increased by .% and .%, respectively, in a certain month, with the growth rates narrowing by . and . percentage points compared to the previous period. The overall year-on-year increase in energy prices decreased from .% in the previous month to .%, providing some relief from inflationary pressures.

Food inflation continues to rise, significantly impacting Japanese residents' consumption and living standards. In a certain month, prices of fresh food and other food items in Japan increased by .% and .%, respectively, contributing . and . percentage points to the overall inflation. Notably, prices of grains and fresh vegetables rose significantly by .% and .%, respectively. The proportion of food expenditure in Japanese residents' consumption expenditure has been continuously increasing. From January to May this year, the Engel coefficient for households with two or more people in Japan rose to %, reaching the highest level since 2015.

It is noteworthy that since the beginning of the month, multiple regions in Japan have been plagued by a "rice shortage," leading to a significant increase in rice prices. In the month, the price of Japanese japonica rice rose by .% year-on-year, marking the largest increase since . The upward trend further expanded to .% in the month. In response to the ongoing rice shortage, the Japanese government has refused to release reserve rice into the market, citing the imminent arrival of new rice, sparking widespread controversy among the public.

The path of interest rate hikes by the Bank of Japan remains cautious. Compared to the slowing trend in overall and core growth, Japan's year-on-year increase in prices excluding fresh food and energy was 3.6% in the month, higher than the expected and previous values of 3.5%. Additionally, supported by summer bonuses, Japanese residents' real income growth briefly turned positive between June and July, but contracted again in August.

Bank of Japan Governor Kazuo Ueda previously stated that for inflation to be sustainably and stably maintained at %, the driving factors of inflation must shift from rising raw material prices to solid domestic demand and wage growth. Currently, Japanese service inflation and household income growth remain constrained. From an economic perspective, this implies that the Bank of Japan will maintain a more cautious stance on interest rate hikes.

Mizuho Securities recently stated that prolonged political turmoil could prevent the Bank of Japan from raising interest rates; political uncertainty ahead of the House of Representatives election may lead to a weakening of the yen, thereby boosting the stock market. Mitsubishi UFJ Financial Group, on the other hand, believes that the likelihood of the Bank of Japan raising rates again before the end of the year is increasing, depending on Japan's economic performance and developments post-election. Mitsubishi UFJ noted that the Japanese stock market has fully recovered from its summer decline, indicating an improvement in financial stability risks, which could encourage the Bank of Japan to maintain its accelerated trajectory of rate hikes.

On a certain date, Haruhiko Kuroda, the Governor of the Bank of Japan, expressed a cautious stance on raising interest rates. He believes that although there are some signs of weakness in the Japanese economy, it is still in the process of moderate recovery and is expected to continue growing at a rate above its potential. However, the central bank must remain vigilant to market and foreign exchange fluctuations and their impact on the Japanese economy and prices. The international exchange market immediately reacted to this, with the USD/JPY exchange rate breaking through a certain level, rising by .% within the day.