Recent Tokyo core CPI data accelerating to 2.7% year-over-year in September—driven by higher energy costs amid Middle East tensions and broader cost pass-through—has reinforced Bank of Japan expectations for nationwide core inflation near 2.5% in fiscal 2026. The BOJ's September rate hike to 1.25% and shift toward preventing overshoots reflect this trajectory, supported by core-core measures hitting 3.0% and persistent services inflation. However, gasoline subsidies, base effects, and historical moderation patterns after energy spikes contribute to trader consensus favoring outcomes at or below 2.4%, with upcoming October 29-30 BOJ forecasts and November nationwide prints as key near-term catalysts.