Japan’s annual inflation rate rose to 1.7% in June 2026, up from 1.5% in May, marking the highest level since December. The acceleration was driven primarily by a smaller decline in electricity and gas prices following a reduction in government energy subsidies.
Additional upward pressure came from several categories: transport (2.4% vs 1.9% in May), housing (1.0% vs 0.9%), clothing (steady at 1.7%), household goods (2.4% vs 2.2%), healthcare (1.3% vs 0.0%), recreation (1.5% vs 1.7%), and miscellaneous items (0.3% vs 0.2%). In contrast, education costs remained in deflation at -6.0%, compared with -6.1% previously.
Food prices increased 3.2% year-on-year, easing from 3.5% in May and marking the slowest pace since July 2024, as rice prices declined for the second consecutive month. Core inflation, which excludes fresh food, edged up to 1.6% from 1.4%, in line with market expectations and reaching its highest level since March. Nonetheless, it stayed below the Bank of Japan’s 2% target for the fifth consecutive month.
