Japan Core Inflation Matches Estimates

Japan’s core consumer price index, which excludes fresh food but includes energy, increased 1.6% year-on-year in June 2026, following a 1.4% rise in May, which was the lowest level since March 2022. It was the highest core inflation rate since March and was in line with market forecasts of 1.6%. Still, the latest reading remained below the Bank of Japan’s 2% target for a fifth straight month, as government fuel subsidies helped offset price pressures from higher oil costs linked to the Middle East conflict. Meanwhile, the index excluding the effects of volatile fresh food and fuel, which is closely watched by the Bank of Japan as a better gauge of demand-driven price movements, rose 1.7% year-on-year in June, marking the softest increase since August 2022. The BoJ raised interest rates by 25 bps to their highest level since September 1995 at its June meeting, marking the first rate hike since last December, to prevent higher oil prices from fueling inflation.

Japan’s core consumer price index, which excludes fresh food but includes energy, rose 1.4% year-on-year in May 2026, in line with both the previous figure and market forecasts. Still, the latest reading marked the lowest level since March 2022 and remained below the Bank of Japan’s 2% target for a fourth straight month, as government fuel subsidies helped offset price pressures from higher oil costs linked to the Middle East conflict. Meanwhile, the index excluding the effects of volatile fresh food and fuel, which is closely watched by the Bank of Japan as a better gauge of demand-driven price movements, rose 1.8% year-on-year in May, marking the softest increase since September 2022. The BoJ raised interest rates by 25 bps to their highest level since September 1995 at its June meeting, marking the first rate hike since last December, to prevent higher oil prices from fueling inflation.

Japan’s core consumer price index, which excludes fresh food but includes energy, rose 1.4% year-on-year in April 2026, easing from 1.8% in the previous month and coming in softer than market forecasts of 1.7%. The latest reading marked the lowest level since March 2022 and remained below the Bank of Japan’s 2% target for a third straight month, as government fuel subsidies helped offset price pressures from higher oil costs linked to the Iran war. Meanwhile, the index excluding the effects of volatile fresh food and fuel, which is closely watched by the Bank of Japan as a better gauge of demand-driven price movements, rose 1.9% in April, marking the softest increase since July 2024. The BoJ will meet on June 16, after keeping its short-term policy rate at 0.75% last month amid higher oil prices and yen weakness. The policymakers remained cautious about the uncertain situation in the Middle East, although several members still saw scope for near-term interest rate hikes.