Japan’s core consumer price index (CPI)—which excludes fresh food but includes energy—rose 1.6% year-on-year in June 2026, up from a 1.4% increase in May, the weakest pace since March 2022. June’s reading was the highest core inflation rate since March and matched market expectations of 1.6%.
Despite the uptick, core inflation remained below the Bank of Japan’s 2% target for a fifth consecutive month, as government fuel subsidies continued to cushion the impact of higher oil prices stemming from tensions in the Middle East.
The CPI measure that excludes both fresh food and fuel—closely monitored by the Bank of Japan as a better indicator of demand-driven inflation—climbed 1.7% year-on-year in June, its slowest increase since August 2022.
At its June meeting, the Bank of Japan raised its policy rate by 25 basis points to the highest level since September 1995, and the second hike since last December, aiming to prevent rising oil prices from feeding through more broadly into inflation.
