Economists are wary of Core Inflation hitting 3%, indicating inflation has reached producer levels. Although the August Headline Inflation was maintained below 5% on an annual basis, and recorded a deflation of 0.21% on a monthly basis. However, the annual Core Inflation in the same period booked 3.04% (Vs. Jul. 2.86%). This increase also occurred when there was no increase in Administered Prices (such as fuel and electricity) for the August period, indicating that producers had anticipated inflation expectations by increasing the prices of a number of goods. NHKSI Research sees that both supply restrictions and subsidized fuel price increases will have a propagation impact on Core Inflation. Meanwhile, limiting the supply of subsidized fuel means that people are directed to use non-subsidized fuel. In the end, inflation expectations mean investors expect a higher Expected Return on investment instruments.

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