Japan Inflation Rate Rises to 6-Month High

Japan’s annual inflation rate accelerated to 1.7% in June 2026 from 1.5% in the prior month, marking the highest reading since December. The pickup was largely driven by a slower decline in electricity and gas prices as government energy subsidies were scaled back. Price pressures also strengthened for transport (2.4% vs 1.9% in May), housing (1.0% vs 0.9%), household goods (2.4% vs 2.2%), healthcare (1.3% vs flat reading), and miscellaneous items (0.3% vs 0.2%), while clothing inflation held steady (at 1.7%). Recreation inflation eased (1.5% vs 1.7%), while education stayed in deflation (-6.0% vs -6.1%). On the food side, prices increased 3.2% yoy, slowing from 3.5% in May to the weakest pace since July 2024, as rice prices fell for the second month running. Core inflation, which excludes fresh food, rose to 1.6% from 1.4%, matching market consensus and reaching its highest since March. However, core inflation remained below the Bank of Japan’s 2% target for a fifth straight month.

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