FX.co ★ Tokyo Core Inflation Hits 3-Month High

Core consumer prices in Tokyo’s central wards rose 1.6% year-on-year in June 2026, up from 1.3% in May and matching market expectations. This was the first acceleration since September of the previous year and the fastest pace in three months, indicating that price pressures linked to the Middle East conflict are broadening. Even so, inflation remained below the Bank of Japan’s 2% target for a fifth straight month, as fuel subsidies and favorable base effects helped cushion the impact of higher raw material costs tied to the conflict. Meanwhile, the CPI measure that excludes both fresh food and energy—viewed by the BoJ as a more reliable indicator of underlying inflation—climbed 1.9% year-on-year, compared with 1.6% in May. At its June meeting, the BoJ raised interest rates by 25 basis points to their highest level since September 1995—its first hike since the previous December—in an effort to prevent rising oil prices from stoking further inflation.