Japan Industrial Output Grows Unexpectedly; Tokyo Inflation Remains Stable

(RTTNews) - Japan's industrial production grew unexpectedly in October and Tokyo core inflation remained stable at the above target level, official data showed on Friday.

Industrial production grew 1.4 percent month-on-month in October, confounding expectations for a drop of 0.5 percent. However, the increase was weaker than a 2.6 percent rise seen in September, the Ministry of Economy, Trade and Industry said.

On a yearly basis, growth in industrial output eased to 0.8 percent from 2.5 percent in September.

Shipments and inventories increased 1.3 percent and 0.6 percent, respectively. Meanwhile, the inventory ratio dropped 1.3 percent.

The ministry said industrial production fluctuates indecisively. According to the Survey of Production Forecast in Manufacturing, production is expected to decrease in November and December.

Another report from the ministry showed that retail sales grew 1.6 percent in October from a month ago, when sales remained flat.

On a yearly basis, retail sales logged a faster-than-expected growth of 1.7 percent, following an increase of 0.2 percent in September. Sales were forecast to rise 0.8 percent.

Headline inflation in Tokyo remained unchanged at 2.7 percent in November, the Ministry of Internal Affairs and Communications said. Core inflation held steady at 2.8 percent in November. In a separate communique, the Ministry of Internal Affairs and Communications said the unemployment rate remained unchanged at 2.6 percent in October.

Housing starts increased for the first time in seven months in October, the Ministry of Land, Infrastructure, Transport, and Tourism reported.

Housing starts climbed unexpectedly by 3.2 percent, in contrast to the 7.3 percent decrease in September. Economists had forecast a 5.0 percent fall.

Meanwhile, construction orders declined for the first time in three months in October. Orders decreased 10.1 percent following a sharp growth of 34.7 percent posted in September.

ING economist Min Joo Kang said today's data indicate that the economy is recovering following a temporary contraction in the third quarter of 2025.

Core inflation is likely to remain around current levels, driven by a weak Japanese yen and strong wage growth, the economist noted.