Japan Food Sales Tax Set at 1% Under Takaichi’s Proposal

Japan plans to temporarily cut its sales tax on food and drinks to 1% for two years, Bloomberg reported. The government chose a low positive rate instead of zero to avoid the costly, time-consuming reprogramming of retailers’ cash registers; a 0% rate would take about a year to implement, while 1% could halve that timeline. To take effect in April 2027, the measure must still be legislated and passed by the Diet (parliament), with draft legislation expected in an extraordinary session in autumn 2026. Policymakers hope the measure will ease household burdens, though economists warned that prices may not fall as much as expected, limiting the benefit for consumers.

Japan's food prices increased 3.2% year-on-year in June 2026, slowing from 3.5% in May and marking the softest rise since July 2024. Price growth slowed for fresh vegetables (2.6% vs 3.8% in May), cakes and candies (5.7% vs 8.1%), prepared foods (4.2% vs 4.4%), and beverages (6.8% vs 8.7%). At the same time, cereal cost fell for the second straight month (-2.5% vs -0.9%) while fresh fruit prices stayed in deflation (-0.9% vs -1.6%). In contrast, inflation accelerated for fish and seafood (6.9% vs 5.5%), meats (4.3% vs 3.5%), dairy products and eggs (4.6% vs 3.6%), oils, fats, and seasonings (4.2% vs 3.9%), alcoholic beverages (0.4% vs 0.2%), and meals eaten out (1.2% vs 1.0%). Among staple foods, rice prices declined 8.7% from a year earlier, falling for the second consecutive month and registering the largest drop since August 2015.

Japan's food prices increased 3.5% year-on-year in May 2026, matching April's pace and remaining at their slowest pace since October 2024. Costs continued to rise for fish and seafood (5.5% vs 5.8% in April), meat (3.5% vs 4.4%), dairy products and eggs (3.6% vs 4.9%), oils, fats, and seasonings (3.9% vs 4.2%), cakes and candies (8.1% vs 7.7%), prepared foods (4.4% vs 4.8%), beverages (8.7% vs 9.4%), alcoholic beverages (0.2% vs 0.9%), and meals eaten out (1.0% vs 1.1%). At the same time, fresh vegetable prices rebounded after five consecutive months of declines (3.8% vs -2.2%), while cereal prices fell for the first time since December 2021 (-0.9% vs 1.2%) and fresh fruit prices stayed in deflation (-1.6% vs -3.6%). Among staple foods, rice prices declined 4.9% from a year earlier, marking their first annual drop since November 2022.