Japan’s core consumer price index (CPI) — which excludes fresh food but includes energy — rose 1.7% year-on-year in August 2026, following a 1.8% increase in July. The pace of growth eased from July’s six‑month high and came in slightly below market expectations of a 1.8% gain. Even so, core inflation remained under the Bank of Japan’s 2% target for an eighth consecutive month, as government fuel subsidies continued to offset upward pressure from higher oil prices linked to the conflict in the Middle East.
By contrast, the CPI measure that strips out both fresh food and fuel — a gauge the Bank of Japan regards as a better indicator of demand-driven inflation — climbed 1.9% year-on-year in August, matching the fastest increase in three months.
At its July meeting, the Bank of Japan kept its benchmark interest rate at 1.0%, the highest level since September 1995. This followed a 25-basis-point hike in June, aimed at preventing rising oil prices from stoking broader inflationary pressures.
