| Consensus | Consensus Range | Actual | Previous | Revised | |
| CPI - Y/Y | 1.9% | 1.8% to 2.0% | 1.9% | 1.7% | 1.6% |
| Ex-Fresh Food - Y/Y | 1.8% | 1.7% to 1.9% | 1.8% | 1.6% | |
| Ex-Fresh Food & Energy - Y/Y | 1.9% | 1.8% to 2.0% | 1.9% | 1.7% |
Highlights
Japan’s consumer price index accelerated further in July in line with expectations as energy and food prices rose, pushing inflation closer to the Bank of Japan’s 2% target.
The uptrend in consumer inflation is becoming increasingly clear as rising energy costs amid prolonged tensions in the Middle East and the yen’s weakness push up import costs, putting further upward pressure on the CPI.
The government announced on August 7 that it had updated the CPI base year, shifting it to 2025 from 2020. It revises the base year every five years, with the change taking effect from the July figures. The update resulted in a minor 0.1 percentage-point downward adjustment to the headline CPI for June 2026, while the core CPI, which excludes fresh food, and the core-core CPI, which excludes both fresh food and energy, were not revised.
Along with price gains in energy and food, mobile phone communication fees, auto insurance premiums and the cost of house maintenance, such as painting, also climbed during the month, pushing up the overall CPI.
The annual July core CPI, excluding fresh food, accelerated to 1.8% under the 2025 base-year formula. It came in line with the forecast and was the highest since January, when it stood at 1.9%, after rising 1.6% in June, which was unrevised under the new formula.
The year-on-year total CPI also accelerated to 1.9%, matching the consensus. The June figure was revised down to 1.6% under the new base year from 1.7%. The July figure was the highest since December 2025, when it stood at 2.1%. The total CPI rose to 1.5% in May from 1.4% in April and 1.5% in March.
The core-core CPI, excluding fresh food and energy, stood at 1.9%, up from an unrevised 1.7% under the new formula.
Details:
Japan July core CPI (excluding fresh food) +1.8% y/y under 2025 base year (June +1.6%, unrevised under new formula); median forecast +1.8%
Japan July total CPI +1.9% y/y; June revised down to +1.6% under new base year from +1.7% reported last month; median forecast +1.9%
Japan July core-core CPI (ex-fresh food, energy) +1.9% y/y, 52nd straight rise (June +1.7%, unrevised under new base year); median forecast +1.9%
Japan has said CPI base-year shift, basket update led to zero to 0.1 point downward revisions to all 3 main CPI measures in 1st 6 months of 2026
Japan July inflation picks up as overall annual energy price edges higher; propane, diesel climb, while gasoline eases
Japan July CPI: processed food +3.0% (+0.72 point) vs. +3.1% in June, contribution in June revised down to 0.73 pt from 0.78 pt
Japan July CPI: energy prices +0.6% y/y (+0.05 point) vs. revised down to -0.4% (-0.03 pt) in June from -0.1% (-0.01 pt)
Japan July CPI services (ex-owners' equivalent rent) +1.5% vs. revised up to 1.4% in June from +1.2%; goods (ex-fresh food) +2.4% vs. revised down to +2.0% in June from +2.1%
Market Consensus Before Announcement
Japan’s nationwide core consumer price index (CPI), which excludes fresh food, is expected to accelerate further in July, along with two other key readings, as a general uptrend in prices stemming from rising import costs amid prolonged geopolitical tensions in the Middle East and the weaker yen continues to push up prices.
The government announced on August 7 that it had updated the CPI base year, shifting it to 2025 from 2020. It revises the base year every five years, with the change taking effect from the July figures. The update resulted in a minor 0.1 percentage-point downward adjustment to the total CPI for June 2026, while the core CPI, which excludes fresh food, and the core-core CPI, which excludes both fresh food and energy, were not revised.
Falling food prices and the government’s efforts to cap gasoline and utility prices are expected to ease some inflationary pressure, but the underlying upward trend in nationwide prices is seen strengthening in July. The forecast is in line with Tokyo CPI figures released on July 31, which already indicated an acceleration in consumer inflation in the capital.
The core CPI is expected to rise 1.8% on the year in July, accelerating from a 1.6% increase a month earlier. It rose just 1.4% in April and May, the lowest level since March 2022.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Annual changes in the CPI represent the rate of inflation.
Description
The CPI has been in the spotlight as Japan struggled to make its way out of deflation. The report tracks changes in the price of a basket of goods and services that a typical Japanese household might purchase. The preferred measure is the year over year percent change. Markets will typically pay more attention to the core measure that excludes only fresh food because volatile food prices can distort overall CPI. A second core measure that excludes energy as well is also available. As the most important inflation indicator, the CPI data are closely monitored by the Bank of Japan. Rising consumer prices may prompt the BoJ to raise interest rates in order to manage inflation and slow economic growth. Higher interest rates make holding the yen more attractive to foreign investors, and this higher level of demand will place upward pressure on the value of the yen.
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.