Nikkei Falls as Tokyo's Inflation Exceeds Target, Raising Rate Hike Prospects

Japanese shares dipped on Friday, as Tokyo's core consumer inflation accelerated in November, surpassing the central bank's 2% target and stoking expectations of a near-term rate hike.

The Nikkei 225 slipped 0.37%, or 141.03 points, to finish at 38,208.03.

Tokyo's core consumer price index (CPI), excluding fresh food, rose 2.2% year-on-year, up from 1.8% in October. A key measure excluding both fresh food and fuel, closely watched by the Bank of Japan, increased by 1.9%, also up from 1.8%.

The data, seen as a precursor for nationwide price trends, pointed to rising costs in rent, utilities, and food, partly due to the phase-out of utility subsidies.

Service-sector prices also climbed 0.9% year-on-year, from 0.8%, reinforcing the BOJ's view that sustained wage increases are driving higher service costs.

In economic data, Japan's retail sales grew 1.6% in October to 13.8 trillion yen, outpacing the prior month's growth but falling short of the 2.2% market forecast. September's revised gain stood at 0.7%.

The unemployment rate ticked up to 2.5% in October from 2.4% the previous month, with employment rising slightly to 68 million. However, the number of jobless people increased to 1.71 million.

Industrial output rose 3% in October from the previous month, missing expectations for a 3.9% increase, and following a 1.6% gain in September, according to preliminary data.

The core consumer price index (CPI) for the Ku-area of Tokyo rose 2.2% year-on-year in November, up from 1.8% in October, marking the highest inflation reading in three months

On the corporate side, Nippon Prologis REIT (TYO:3283) will acquire Prologis Park Yachiyo 1 in Chiba for 39 billion yen on December 2. The deal, funded by borrowings and cash, offers a 3.9% NOI yield and an adjusted yield of 4%, with an expected annual rent of 1.87 billion yen from new tenant leases.

Metaplanet (TYO:3350) was added to the Amplify Transformational Data Sharing ETF (BLOK), a $930 million fund that tracks 53 blockchain-focused firms, including MicroStrategy, Robinhood, and Nvidia.

Kuroda Group (TYO:291A), a materials and electronics component maker, set its IPO price range at 640-700 yen per share. The company is authorized to issue up to 180 million shares, with 46.6 million shares outstanding as of November 12.