Tokyo Core Inflation Hits 5-Month High

Core consumer prices in Tokyo’s central wards rose 1.8% yoy in August 2026, following a downwardly revised 1.7% gain in July and exceeding expectations of 1.7%. It was the third straight month of acceleration and marked the fastest increase since March, signaling broadening price pressures stemming from the Middle East conflict. However, inflation remained below the BoJ’s 2% target for a 7th consecutive month, as fuel subsidies and favorable base effects helped limit the impact of higher raw material costs linked to the conflict. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, increased 2.0% yoy, up from a downwardly revised 1.8% in July, marking the highest reading in five months. The BoJ held its policy rate at its July meeting after raising it by 25 bps to its highest level since September 1995 at its June meeting, in an effort to prevent higher oil prices from fueling inflation.

Core consumer prices in Tokyo’s central wards increased 1.9% yoy in July 2026, following a 1.6% rise in the previous month and exceeding expectations of 1.7%. It was the second consecutive month of acceleration and marked the fastest increase since January, signaling broadening price pressures stemming from the Middle East conflict. However, inflation remained below the Bank of Japan’s 2% target for a sixth consecutive month, as fuel subsidies and favorable base effects helped limit the impact of higher raw material costs linked to the conflict. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is viewed by the BoJ as a better gauge of underlying inflation, increased 2.0% yoy, up from 1.9% in June, marking the highest reading in four months. 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, in an effort to prevent higher oil prices from fueling inflation.

Core consumer prices in Tokyo’s central wards rose 1.6% year-on-year in June 2026, accelerating from 1.3% in the previous month and in line with market expectations. It was the first acceleration since September last year and marked the fastest increase in three months, a sign of broadening price pressures from the Middle East conflict. However, inflation remained below the Bank of Japan’s 2% target for a fifth consecutive month, as fuel subsidies and favorable base effects helped limit the impact of higher raw material costs linked to the Middle East conflict. Meanwhile, CPI, which excludes volatile fresh food and energy costs and is seen by the BoJ as a better gauge of underlying inflation, increased 1.9% year-on-year, up from 1.6% in May. 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.