Japan Macro Updates

The One Stop Portal for Japan Macroeconomic Data. Simplified and Summarized!

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

24th Jul 2026

Japan CPI

Key takeaway: Japan’s national CPI for June 2026, released by the Statistics Bureau on July 24, showed inflation picking up for the first time in three months and delivered a result broadly in line with expectations — providing modest support for the BOJ’s normalisation path without materially shifting the policy outlook. The core CPI excluding fresh food rose 1.6% year-on-year in June, up from May’s 1.4% which had been the lowest reading since March 2022, matching the Bloomberg consensus and marking the first acceleration since March. The core-core measure — excluding both fresh food and energy, the BOJ’s preferred gauge of demand-driven price movements — rose 1.7% year-on-year, its softest reading since July 2024, while headline CPI climbed 1.7%, its highest since December 2025. The pickup in headline and core was largely driven by a slower decline in electricity and gas prices as government energy subsidies were scaled back, with transport, housing, household goods, and healthcare all firming on the month. Oxford Economics lead Japan economist Norihiro Yamaguchi cautioned that the figures do not yet suggest underlying inflation pressures are strengthening, given government intervention continues to suppress measured price growth, though he flagged that upstream PPI pressures are building and projected core-core CPI to rise toward 3% by early 2027 — a trajectory that would give the BOJ considerably more conviction to hike again, but one that still leaves the central bank in a wait-and-see posture for now, with core inflation running below its 2% target for a fifth consecutive month. 

18th Jun 2026

Key takeaway: Data released by Japan’s Ministry of Internal Affairs and Communications showed that headline CPI increased by 1.5% in May compared with a year earlier, slightly higher than the 1.4% increase recorded in April. Meanwhile, Core CPI, which excludes fresh food, increased by 1.4% year-over-year, unchanged from the previous month and remaining below the Bank of Japan’s 2% inflation target. The more closely watched measure of inflation, which excludes both fresh food and energy, increased by 1.8% compared with a year earlier, up from 1.7% in April, suggesting that underlying inflationary pressures continued to remain relatively resilient. Taken together, the latest data suggests that headline inflation remained relatively subdued in May, although underlying price pressures continued to hold up despite government measures to reduce energy costs 

22nd May 2026

Key takeaway: Japan’s national CPI for April 2026, released by the Statistics Bureau on May 22, came in below all economist estimates and delivered a significant complication for the Bank of Japan’s normalisation timeline. The core CPI — excluding fresh food — rose just 1.4% year-on-year in April, slipping below the BOJ’s 2% target and printing at the slowest pace in four years, with the result falling below every estimate in the Bloomberg survey of economists. Stripping out energy as well, the CPI climbed 1.9% annually — also below expectations — restrained by processed food prices growing at a much slower pace than in March, a sharper fall in private high school fees, and an easing in durable goods price gains. The government’s ongoing energy subsidy program continued to suppress headline readings, with electricity prices falling 8.0% and gas prices down 5.2% in annual terms, masking what would otherwise be a considerably firmer inflation print in the absence of policy support. The April read sits in sharp contrast to the trade and wage data pointing to underlying nominal pressures building in Japan’s economy, and arrives just days after the BOJ held rates unchanged at its April meeting while signalling continued vigilance on inflation risks from the Middle East conflict — creating difficult optics for the central bank to justify a near-term rate hike at a time when its own key inflation gauge is running below target and decelerating. 

24th Apr 2026
Key takeaway: Japan’s national CPI data for March 2026, released April 24 by the Statistics Bureau, showed a modest re-acceleration in inflation after two months of softening — though government energy subsidies kept the headline well below the Bank of Japan’s target. Core CPI — excluding fresh food — rose 1.8% year-on-year in March, up from 1.6% in February and in line with consensus expectations, marking the first acceleration in five months. Headline inflation edged up to 1.5% from 1.3% in February, remaining below the BOJ’s 2% target for a second consecutive month. The core-core measure — stripping out both fresh food and energy — dipped to 2.4% from 2.5%, its lowest since October 2024, suggesting that underlying domestic price pressures are actually easing even as the energy shock from the Iran war complicates the picture. The energy component was significantly distorted by government intervention: following Prime Minister Takaichi’s fuel subsidy rollout — which caps pump prices at 170 yen per litre — energy costs fell 5.7% in March, masking what would otherwise have been a far more pronounced inflation spike. Analysts at Credit Agricole warned that should crude oil prices remain elevated and energy subsidies not be expanded, core inflation could rise toward 3% by the end of fiscal year 2026. For the BOJ, which held rates steady at its most recent meeting, the March data reinforces a delicate balancing act — the Iran war is pushing imported energy costs higher and threatening yen depreciation, while weak household spending and softening core-core inflation argue for continued caution on further tightening.  

 

24th Mar 2026

Key takeaway: The latest Japan CPI data (February 2026) indicates a continued moderation in inflation, with the slowdown more evident in headline prints while underlying pressures remain firmer. Core CPI (excluding fresh food) rose ~1.6% YoY (down from ~2.1% in January), slipping below the Bank of Japan’s 2% target for the first time in nearly four years, largely reflecting the impact of government energy subsidies that have lowered utility costs. Headline inflation also eased from ~1.5% to ~1.3% YoY, reinforcing the near-term disinflation trend. At the same time, core-core inflation (excluding both food and energy) remains elevated at ~2.5%, suggesting that underlying domestic price pressures—particularly from services and wages—are still intact. Food prices continue to rise at a solid pace, while services inflation remains gradual but steady. Overall, the report highlights a policy-driven moderation in inflation masking still-sticky underlying dynamics, complicating the BOJ’s policy outlook as it navigates rate normalization.  

 

20th Feb 2026

Key takeaway: The latest print for the month of January showed headline CPI in Japan decreased sharply from 2.1% in January to 1.5% in December. The more closely watched Core CPI, which strips out fresh food, also declined sharply from 2.4% to 2.0%. Both these measure mostly declined on the back of a reduction in energy CPI caused by energy subsidies. Core-core CPI, which strips out fresh food as well as energy, also decreased modestly from 2.9% to 2.6%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. Even though the measure fell modestly, it still remains well above the 2% target. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May 2025 from a year ago levels and have only started cooling in the last 6-9 months. The cooling in rice inflation continued with the rate declining from 34% in December to 27% in January. As rice inflation reduces further, that will continue to pressure the core-core measure downwards. In summary though, inflation in Japan has been above the target level for 3 straight years and that will keep BoJ on a tightening cycle. However, the overall economic uncertainty keeps the BoJ on tenterhooks. Japanese exports had fallen for 4 to 5 consecutive months, and then some recovery was seen in 4Q 2025 after the automobile tariff situation was resolved with the US government. Even though 2nd quarter GDP growth came in strong, 3rd quarter GDP contracted – the first such contraction in 6 quarters. The revised GDP number showed 3rd quarter GDP contraction was worse than previously estimated. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ raised rates at its December meeting but held steady at the January meeting and has not yet given any clear indications of the timing of the next rate cut.  

23rd Jan 2026

Key takeaway: The latest print for the month of December showed headline CPI in Japan decreased sharply from 2.9% in November to 2.1% in December. The more closely watched Core CPI, which strips out fresh food, also declined sharply from 3.0% to 2.4%. Both these measure mostly declined on the back of a reduction in energy CPI caused by energy subsidies. Core-core CPI, which strips out fresh food as well as energy, also decreased slightly from 3.0% to 2.9%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 6 months. The cooling in rice inflation continued with the rate declining from 37% in November to 34% in December. Even though headline inflation softened significantly in December, there wasn’t much of a change in the core core measure. As rice inflation reduces further, that will continue to pressure the core-core measure downwards. In summary though, inflation in Japan has been above the target level for 3 straight years and that will keep BoJ on a tightening cycle. However, the overall economic uncertainty keeps the BoJ on tenterhooks. Japanese exports had fallen for 4 to 5 consecutive months, and then some recovery was seen in 4Q 2025 after the automobile tariff situation was resolved with the US government. Even though 2nd quarter GDP growth came in strong, 3rd quarter GDP contracted – the first such contraction in 6 quarters. The revised GDP number showed 3rd quarter GDP contraction was worse than previously estimated. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ raised rates at its December meeting but held steady at the January meeting and has not yet given any clear indications of the timing of the next rate cut.  

18th Dec 2025

Key takeaway: The latest print for the month of November showed headline CPI in Japan decreased from 3.0% in October to 2.9% in November. The more closely watched Core CPI, which strips out fresh food, held steady at 3.0%. Core-core CPI, which strips out fresh food as well as energy, also decreased slightly from 3.1% to 3.0%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 6 months. The cooling in rice inflation continued with the rate declining from 40% in October to 37% in November. Inflation in Japan has been above the target level for 3 straight years. However, the overall economic uncertainty keeps the BoJ on tenterhooks. Japanese exports had fallen for 4 to 5 consecutive months, and then some recovery was seen in the months of September, October and November. Even though 2nd quarter GDP growth came in strong, 3rd quarter GDP contracted – the first such contraction in 6 quarters. The revised GDP number showed 3rd quarter GDP contraction was worse than previously estimated. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ held rates steady at its October meeting, but hawkish sentiment has been growing with dissents votes. It is widely believed that the BoJ will raise rates at its December meeting.  

21st Nov 2025

Key takeaway: The latest print for the month of October showed headline CPI in Japan increased from 2.9% in September to 3.0% in October. The latest rise in the 2nd month in a row of y-o-y increases after having declined for 4 consecutive months. The more closely watched Core CPI, which strips out fresh food, also increased from 2.9% in September to 3.0% in October. Core-core CPI, which strips out fresh food as well as energy, also increased from 3.0% to 3.1%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 3-4 months. The cooling in rice inflation continued with the rate declining from 49% to 40% in October. Inflation in Japan has been above the target level for 3 straight years. However, the overall economic uncertainty caused by tariff issues keeps the BoJ on tenterhooks. Japanese exports have fallen for 4 to 5 consecutive months, with some recovery seen in the months of September and October. Even though 2nd quarter GDP growth came in strong, 3rd quarter GDP contracted – the first such contraction in 6 quarters. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ held rates steady at its October meeting, but hawkish sentiment has been growing with dissents votes. The December meeting is now in view with some market participants expecting the BoJ to hike a second time in 2025  

23rd Oct 2025

Key takeaway: The latest print for the month of September showed headline CPI in Japan increased from 2.7% in August to 2.9% in September. The latest rise in headline CPI reverses a trend of four consecutive months of y-o-y declines. The more closely watched Core CPI, which strips out fresh food, also increased from 2.7% in August to 2.9% in September. However, once again energy prices played a larger role in the monthly increase driven by lower government subsidies. The energy component grew 2.3% y-o-y, a shift from the 3.3% decrease seen last month in August. Core-core CPI, which strips out fresh food as well as energy, declined from 3.3% in August to 3.0% in September. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 3 months. Nonetheless, the latest drop in the core-core measure in the month of September will also be taken into account when the BoJ meets next week. Inflation in Japan has been above the target level for 3 straight years. However, the overall economic uncertainty caused by tariff issues keeps the BoJ on tenterhooks. Japanese exports have fallen for 4 to 5 consecutive months, with some modest recovery seen in the month of September. Even though 2nd quarter GDP growth came in strong, it is key to note that the Japanese economy is highly dependent on exports. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ held rates steady at its September meeting, but hawkish sentiment grew with 2 dissenting votes. It is likely to hold rates next week, especially in light odf the recent political leadership change in Japan.    

19th Sep 2025

Key takeaway: The latest print for the month of August showed headline CPI in Japan slowed further from 3.1% in July to 2.7% in August. It is key to note that this is the fourth consecutive month of y-o-y slowdown in headline CPI. The more closely watched Core CPI, which strips out fresh food, also decreased sharply from 3.1% in July to 2.7%% in August. The reductions in headline and core CPI were significantly driven by a 3.3% drop in energy prices on the back of government subsidies. Rice prices, which have seen astronomical increases over the past year, cooled further with the y-o-y inflation slowing from ~90% to ~70%. The index for food prices gained 8% versus 8.3% in July. Core-core CPI, which strips out fresh food as well as energy, also declined from 3.4% in July to 3.3% in August. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 3 months. Inflation in Japan has been above the target level for 3 straight years. However, the overall economic uncertainty caused by tariff issues keeps the BoJ on tenterhooks. Japanese exports have fallen for 4 to 5 consecutive months. Even though 2nd quarter GDP growth came in strong, it is key to note that the Japanese economy is highly dependent on exports. At the same time, domestic consumption has held up very well in Japan through most of 2025. The BoJ held rates steady at its September meeting, but hawkish sentiment grew with 2 dissenting votes.   

22nd Aug 2025

Key takeaway: The latest print for the month of July showed headline CPI in Japan declined slightly from 3.3% in June to 3.1% in July. Even though the print was slightly higher than consensus expectations, it is key to note that this is the third consecutive month of y-o-y decline in headline CPI. The more closely watched Core CPI, which strips out fresh food, also decreased from 3.3% in June to 3.1% in July. Rice prices, which have seen astronomical increases over the past year, cooled further with the y-o-y inflation slowing from 100% to about 90%. Core-core CPI, which strips out fresh food as well as energy, remained steady at 3.4%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and have only started cooling in the last 2 months. Inflation in Japan has been above the target level for 3 straight years. However, the overall economic uncertainty caused by tariff issues keeps the BoJ on tenterhooks. Japanese exports have fallen for 4 consecutive months. Even though 2nd quarter GDP growth came in strong, it is key to note that the Japanese economy is highly dependent on exports. Should the economy worsen significantly, rate hikes from the BoJ might be on hold for the entirety of 2025. At the same time, if the economy holds up a rate hike from the BoJ before the end of 2025 is on the cards.  

18th Jul 2025

Key takeaway: The latest print for the month of June showed headline CPI in Japan declined slightly from 3.5% in May to 3.3% in June. This is the second consecutive month of y-o-y decline in headline CPI. The more closely watched Core CPI, which strips out fresh food, also decreased from 3.7% in May to 3.3% in June. Rice prices, which have seen astronomical increases over the past year, cooled a bit. The reading was also lower than market expectations of 3.4%. However, Core-core CPI, which strips out fresh food as well as energy, increased from 3.3% to 3.4%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The increase has been mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels and are only slightly lower in June. Services sector inflation also picked up from 1.4% in May to 1.5%. The sharp rise in all the CPI measures in recent months will keep the BoJ under pressure to hike rates. Inflation in Japan has been above the target level for 3 straight years. However, uncertainty due to Trump tariffs bind their hands to some extent. Specifically, Trump’s reciprocal tariffs on Japan of 24% and the Automobile tariffs of 25% and steel and aluminum tariffs of 25% have hit Japan hard, even though the reciprocal tariffs are currently on hold. Japanese exports have demonstrated a soft trend over the past couple of months. Should the economy worsen significantly, rate hikes from the BoJ might be on hold for the entirety of 2025. At the same time, if the economy holds up a rate hike from the BoJ before the end of 2025 is on the cards. The latest inflation prints continue to add to the probability of a rate hike before the end of the year.  

19th Jun 2025

Key takeaway: The latest print for the month of May showed headline CPI in Japan declined slightly from 3.6% in April to 3.5% in May. However, the more closely watched Core CPI, which strips out fresh food, increased from 3.5% in April to 3.7% in May. The reading was also higher than market expectations of 3.6%. Core-core CPI, which strips out fresh food as well as energy, increased as well, from 3.0% to 3.3%. While headline and core CPI have held above the BoJ’s 2.0% inflation target level for the past 3 years, it is the recent rise in the core-core measure which really highlights the underlying price pressures in Japan. The core-core measure rose at its fastest pace since January 2024. The increase was still mostly drive by food items with Japan’s staple rice seeing prices double in May from a year ago levels. Services sector inflation also picked up from 1.3% in April to 1.4%. The sharp rise in all the CPI measures in recent months will keep the BoJ under pressure to hike rates. Inflation in Japan has been above the target level for 3 straight years. However, uncertainty due to Trump tariffs bind their hands to some extent. Specifically, Trump’s reciprocal tariffs on Japan of 24% and the Automobile tariffs of 25% and steel and aluminum tariffs of 25% have hit Japan hard, even though the reciprocal tariffs are currently on hold. Should the economy worsen significantly, rate hikes from the BoJ might be on hold for the entirety of 2025. At the same time, if the economy holds up a rate hike from the BoJ before the end of 2025 is on the cards. The latest inflation prints add to the probability of a rate hike before the end of the year.  

23rd May 2025

Key takeaway: The latest print for the month of April showed headline CPI held steady at 3.6% in April from the previous month of March. However, the more closely watched Core CPI, which strips out fresh food, increased from 3.2% in March to 3.5% in April. The reading was even higher than market expectations of 3.4. Core-core CPI, which strips out fresh food as well as energy, increased as well, from 2.9% to 3.0%. Services prices moderated a bit. But the sharp rise in the core index in recent months will keep the BoJ under pressure to hike rates. Inflation in Japan has been above the target level for 3 straight years. However, uncertainty due to Trump tariffs bind their hands to some extent. Specifically, Trump’s reciprocal tariffs on Japan of 24% and the Automobile tariffs of 25% and steel and aluminum tariffs of 25% have hit Japan hard, even though the reciprocal tariffs are currently on hold. Should the economy worsen significantly, rate hikes from the BoJ might be on hold for the entirety of 2025. At the same time, if the economy holds up a rate hike from the BoJ before the end of 2025 is on the cards.  

18th Apr 2025

Key takeaway: The latest print for the month of March showed headline CPI decreased from 3.7% in February to 3.6% in March. Core CPI, which strips out fresh food, increased from 3.0% in February to 3.2% in March. The reading was in line with market expectations. Core-core CPI, which strips out fresh food as well as energy, increased from 2.6% to 2.9%. This was a substantial increase in core-core CPI. Inflation in Japan has been above the target level for 3 straight years. The latest print keeps the pressure on BoJ to hike rates in the upcoming meetings. However, uncertainty due to Trump tariffs bind their hands to some extent. Specifically, Trump’s reciprocal tariffs on Japan of 24% and the Automobile tariffs of 25% and steel and aluminum tariffs of 25% have hit Japan hard, even though the reciprocal tariffs are currently on hold. Should the economy worsen significantly, rate hikes from the BoJ might be on hold for the entirety of 2025.   

21st Mar 2025

Key takeaway: The Inflation story in Japan is getting interesting (read hotter) by the month! The latest release of CPI in Japan showed National headline CPI decreased from 4% in January to 3.7% in February. Even Core CPI, which excludes fresh food but includes energy, declined from 3.2% in January to 3.0% in December. However, the 3% print was higher than consensus expectations for an increase of 2.9%. Government subsidies for electricity and gas fees contributed to the easing in headline and core inflation. More importantly, Core-core inflation, which excludes fresh food and energy, printed at 2.6%, higher than the 2.5% recorded in January and the highest since March 2024 when it rose 2.9%. This core-core measure has been on an increasing trend since July 2024. The only relief came from a slowdown in Services inflation, which printed at 1.3% compared to 1.4% in January. Services inflation y-o-y has declines for 2 consecutive months. Market participants expect Services inflation to firm up further with this year’s wage negotiations delivering strong growth in wages similar to last year. The spring wage negotiations “Shunto” are concluding and in general, the wage increases seem to be around the 5.0% – 5.5% range, slightly above last year’s growth rates. The BoJ moved to hike rates in January with the policy rate moving up from 0.25% to 0.5%. However, the Central Bank gave no further guidance on the timing on the next hike. However, the latest inflation data further bolsters the case for a next rate hike before 1H 2025 is over.   

21st Feb 2025

Key takeaway: The Inflation story in Japan is getting interesting (read hotter) by the month! The latest release of CPI in Japan showed National headline CPI increased from 3.6% in December to 4% in January. Core CPI, which excludes fresh food but includes energy, rose 3.2% in December, further accelerating from the 3.0% seen in December. The measure also came in hotter than the 3.1% most economists expected. Once again, energy contributed a large portion of the increase in the core measure due to the phasing out of government energy subsidies. Energy prices increased 10.8% in January. However, even Core-core inflation, which excludes fresh food and energy, printed at 2.5%, higher than the 2.4% recorded in December. This core-core measure has been on an increasing trend since July 2024. The only relief came from a slowdown in Services inflation, which printed at 1.4% compared to 1.6% in December. Market participants expect Services inflation to firm up further with this year’s wage negotiations expected to deliver strong growth in wages similar to last year. The BoJ moved to hike rates in January with the policy rate moving up from 0.25% to 0.5%. However, the Central Bank gave no further guidance on the timing on the next hike. However, the latest inflation data bolsters the case for a next rate hike before 1H 2025 is over.   

23rd Jan 2025

Key takeaway: Inflation prints in Japan have mostly been surprising on the upside in recent months. The latest release of CPI in Japan showed National headline CPI increased sharply from 2.9% in November to 3.6% in December. Core CPI, which excludes fresh food but includes energy, rose 3.0% in December compared to 2.7% in November. Admittedly, the latest increase has significantly been on account of the phasing out of government energy subsidies. Energy prices increased 10.1% in December. Core-core inflation, which excludes fresh food and energy, printed at 2.4%, the same as the previous month. This core-core measure has been on an increasing trend since July 2024. Finally, Services inflation printed at 1.6% compared to 1.5% in November. Market participants expect Services inflation to firm up further with this year’s wage negotiations expected to deliver strong growth in wages similar to last year. Given this backdrop, the BoJ also moved to hike rates this week with the policy rate moving up from 0.25% to 0.5%. The Central Bank however gave no further guidance on the timing on the next hike. Market are currently expecting another hike in July. A lot will also depend on this year’s annual spring wage negotiations.  

19th Dec 2024

Key takeaway: Inflation in Japan has generally been above the 2% target level for over 2 years now. The BoJ increased interest rates from around 0% to 0.25% in its July meeting and signalled further rate hikes on the horizon. However, further rate hikes are firmly dependent on how sticky inflation in Japan turns out to be. The latest release of CPI in Japan shows National Core CPI, which excludes fresh food but includes energy, rose 2.7% in November. That number was slightly higher than consensus expectations of 2.6%. However, it was substantially higher than the previous month’s reading of 2.3%. Core CPI in September and October had been significantly lower than the 2.8% recorded in August. The decreases had been primarily attributable to the resumption of energy subsidies by the government. In similar fashion, a reduction in these energy subsidies is primarily the reason behind the latest month’s increase in Core CPI as well. Hence, the BoJ might not read too much into the latest sharp increase. However, core-core inflation, which excludes fresh food and energy, also rose to 2.4% accelerating from 2.3% in October and 2.1% September. This core-core measure has been on an increasing trend since July 2024. Finally, Services inflation was mostly steady at 1.5% in November similar to the previous month. The Fed delivered a jumbo 50 bps rate cut in September. That had taken some pressure off the BoJ to some extent with the interest rate differentials narrowing and the JPY appreciating back again. However, since then US long bond yields have spiked and the JPY has depreciated sharply. Moreover, the Fed has now signalled just 2 rate cuts for 2025 and the markets are in fact pricing even lesser. This would continue to keep the BoJ on tenterhooks. The latest data though improves the chances of the BoJ hiking sooner than expected.  

22nd Nov 2024

Key takeaway: Inflation in Japan has generally been above the 2% target level for over 2 years now. The BoJ increased interest rates from around 0% to 0.25% in its July meeting and signalled further rate hikes on the horizon. However, further rate hikes are firmly dependent on how sticky inflation in Japan turns out to be. The latest release of CPI in Japan shows National Core CPI, which excludes fresh food but includes energy, rose 2.3% in October. That number was slightly higher than consensus expectations of 2.2% and slightly lower than the previous month’s level of 2.4%. The last 2 months core CPI has been significantly lower than the 2.8% recorded in July. July’s increases in Core CPI had reflected phasing out of government subsidies which were put into place to curb household utility bills. However, those subsidies had resumed and this is presumed to have caused the drop in inflation over the past couple of months. On the other hand, core-core inflation, which excludes fresh food and energy, rose 2.3% accelerating from 2.1% in September. It is also worth noting that the latest print was higher than 1.9% in July and 2.0% in August. But it is still relatively soft and has been on a broad downward trajectory. Finally, Services inflation also perked up to 1.5% in October from 1.3% in September, suggesting rising wages were translating to a more sustained rise in prices. The Fed delivered a jumbo 50 bps rate cut in September. That had taken some pressure off the BoJ to some extent with the interest rate differentials narrowing and the JPY appreciating back again. However, since then US long bond yields have spiked and the JPY has depreciated sharply. This would continue to keep the BoJ on tenterhooks. The latest data though improves the chances of the BoJ hiking sooner than expected.  

17th Oct 2024

Key takeaway: Inflation in Japan has generally been above the 2% target level for over 2 years now. The BoJ increased interest rates from around 0% to 0.25% in its July meeting and signalled further rate hikes on the horizon. However, further rate hikes are firmly dependent on how sticky inflation in Japan turns out to be. The latest release of CPI in Japan shows National Core CPI, which excludes fresh food but includes energy, rose 2.4% in September. That number was slightly higher than consensus expectations of 2.3%. However, it was significantly lower than the 2.8% recorded the earlier month in July. July’s increases in Core CPI had reflected phasing out of government subsidies which were put into place to curb household utility bills. However, those subsidies had resumed and this is presumed to have caused the drop in inflation. On the other hand, core-core inflation, which excludes fresh food and energy, rose only 2.1%. Although that is slightly higher than 1.9% in July and 2.0% in August, it is still relatively soft and has been on a broad downward trajectory. The Fed delivered a jumbo 50 bps rate cut in September. That had taken some pressure off the BoJ to some extent with the interest rate differentials narrowing and the JPY appreciating back again. However, since then US long bond yields have spiked and the JPY has depreciated sharply. This would continue to keep the BoJ on tenterhooks.  

20th Sep 2024

Key takeaway: Inflation in Japan has generally been above the 2% target level for over 2 years now. The BoJ increased interest rates from around 0% to 0.25% in its July meeting and signalled further rate hikes on the horizon. However, that is firmly dependent on how sticky inflation in Japan turns out to be. The latest release of CPI in Japan shows National Core CPI, which excludes fresh food but includes energy, rose 2.8% in August. That number was slightly higher than 2.7% in July but mostly in line with expectations. The increases in Core CPI also reflect the phasing out of government subsidies which were put into place to curb household utility bills. However, core-core inflation, which excludes fresh food and energy, rose only 2.0%. Although that is slightly higher than 1.9% in July, it is still relatively soft and has been on a broad downward trajectory. The Fed delivered a jumbo 50 bps rate cut this week. This takes the pressure off the BoJ to some extent with the interest rate differentials narrowing and the JPY appreciating back again. The next data point to watch out for will be the Tokyo area inflation for September due in a few days.  

18th Jul 2024

Key takeaway: With the focus firmly shifted to US inflation and rates, Japan’s monetary policy and currency outlook are more dependent than ever on what happens in the US from here on. After having fallen for 2 months in a row, Japan’s core inflation index has risen for 2 months in a row. The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, increased for a second month in a row – from 2.5% in May to 2.6% in June. The index continues to remain above the 2.0% target level and has been above that key level for over 2 years. BoJ meets on July 30th for its next monetary policy meeting. Given the last couple of months of increasing inflation readings, there is a decent likelihood that we may see a 2nd rate hike in Japan. On the other hand, with the US rate cutting outlook getting a bit firmer, the need for an increase in rates in Japan also diminishes somewhat. It is also worth noting that the latest print of 2.6% was lower than consensus expectations of 2.7%. Given this backdrop, markets are pricing a 50-50 chance of a rate hike at the July meeting.  

24th May 2024

Key takeaway: The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, decreased for a second month in a row – falling from 2.6% in March to 2.2% in April. This comes on the back of a sharp rise in the Core CPI seen in the month of February when Core CPI had shot up from 2.0% in January to 2.8%. While even with the fall this month the index remains above 2.0% and has been above that key level for over 2 years, the sharp drop does likely put some doubts into market participants’ minds about upcoming rate hikes from the BoJ. The softer print reduces the likelihood that the BoJ might hike further in June or July. Headline CPI also decreased from 2.7% in March to 2.5% in April. Finally, “core-core CPI” which excludes both fresh food and energy costs dropped sharply from 2.9% in March to 2.4% in April. The Core-Core CPI have been below the 3% level for 2 months in a row – last seen at this level in November 2022. The “core-core’ index is often seen as more reflective of the inflationary pressures in the economy and the true likelihood of a wage-price inflation cycle. Policy makers in Japan are relying on the strong wage negotiation outcomes this year to spur domestic consumption and sustain inflation at a 2% level. The weak inflation data hence causes some concern from this perspective. At the same time, the weak Japanese Yen is making imports costlier and squeezing Japanese consumers further. There also exists material risk that continued weakness in JPY can result in a further squeeze on consumers. With inflation having been above the 2% levels for most of the past 2 years, the BoJ made its momentous move in monetary policy earlier in the year by raising rates from minus 0.1% to 0-0.1% and by ending yield curve control. However, there are still no clear indications on where monetary policy will proceed to from here. The outcome will be data dependent on Japan and Tokyo inflation as well as the future path of US monetary policy and US inflation. 

19th Apr 2024

Key takeaway: The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, decreased slightly from 2.8% in February to 2.6% in March. This comes on the back of a sharp rise in the Core CPI seen in the last month of February when Core CPI had shot up from 2.0% in January to 2.8%. The key point to note is that even with the slight fall this month, the index remains above 2.0% and has been above that key level for over 2 years. This still remains a key factor in the consideration for future path of monetary policy in Japan. With inflation stickier than expected, the BoJ made its momentous move in monetary policy last month by raising rates from minus 0.1% to 0-0.1% and by ending yield curve control. However, there are still no clear indications on where monetary policy will proceed to from here. The outcome will be data dependent on Japan and Tokyo inflation as well as the future path of US monetary policy and US inflation. While the BoJ is likely to hold rates steady at the April meeting it has also been closely watching the rapidly depreciating Japanese Yen which put further upward pressure on headline inflation in Japan. Headline CPI also decreased slightly from 2.8% in February to 2.7% in March. Finally, “core-core CPI” which excludes both fresh food and energy costs, stood at 2.9% in March – below the 3% level for the first time since November 2022. The “core-core’ index is often seen as more reflective of the inflationary pressures in the economy and the true likelihood of a wage-price inflation cycle. 

22nd Mar 2024

Key takeaway: The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, increased sharply from 2.0% in January to 2.8% in February 2024. The Index has been above the 2% BoJ target since mid 2022 and still remains a key factor in the consideration for future path of monetary policy in Japan. The higher reading was also in line with the recently released Tokyo area inflation numbers which generally provide a early indication of the national CPI numbers. Tokyo inflation in February had also registered a sharp increase from 1.8% to 2.5% in February. With inflation stickier than expected, the BoJ made its momentous move in monetary policy this week by raising rates from minus 0.1% to 0-0.1% and by ending yield curve control. However, there are still no clear indications on where monetary policy will proceed to from here. The outcome will be data dependent on Japan and Tokyo inflation as well as the future path of US monetary policy. Headline CPI increased from 2.2% in January to 2.5% in February. Finally, “core-core CPI” which excludes both fresh food and energy costs, stood at 3.1% in February – lower than the 3.5% recorded last month. The “core-core’ index is often seen as more reflective of the inflationary pressures in the economy and the true likelihood of a wage-price inflation cycle. The last point to also bear in mind has been the sizeable increase in wages for 2024 as an outcome of the ongoing wage negotiations with labour unions across Japan. 

26th Feb 2024

Key takeaway: The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, decreased from 2.3% in December to 2.0% in January 2024. The Index has been above the 2% BoJ target since mid 2022 and still remains a key factor in the consideration for future path of monetary policy in Japan. Even though the index has been higher than the target for a long time, the BoJ also takes note of the fact that it has fallen substantially from its 2023 high of 3.1%. The market expects the BoJ to reverse it easy monetary policy sometime this year. However rapidly falling inflation globally and in Japan makes that decision path a bit uncertain. Headline CPI reduced from 2.6% in December to 2.2% in January. Finally, “core-core CPI” which excludes both fresh food and energy costs, stood at 3.5% in January – also a drop from the 3.8% seen in November and 3.7% seen in December 2023. The “core-core’ index is often seen as more reflective of the inflationary pressures in the economy and the true likelihood of a wage-price inflation cycle. All eyes are now on the outcome of wage price negotiations in Japan in 2024. Early signs from some of the companies that have concluded wage negotiations show a sizeable jump in wages for workers (5% to 7.0%)

18th Jan 2024

Key takeaway: The National Core CPI for Japan, which excludes fresh food prices but includes energy costs, decreased from 2.5% in November to 2.3% in December. The Index has been above the 2% BoJ target since mid 2022 and still remains a key factor in the consideration for future path of monetary policy in Japan. Even though the index has been higher than the target for a long time, the BoJ also takes note of the fact that it has fallen substantially from its 2023 high of 3.1%. The market expects the BoJ to reverse it easy monetary policy sometime this year. However rapidly falling inflation globally and in Japan makes that decision path a bit uncertain. Headline CPI reduced from 2.8% in November to 2.6% in December. Finally, “core-core CPI” which excludes both fresh food and energy costs, stood at 3.7% in December – also a drop from the 3.8% seen in November. The “core-core’ index is often seen as more reflective of the inflationary pressures in the economy and the tru likelihood of a wage-price inflation cycle. All eyes are now on the outcome of wage price negotiations in Japan in 2024.  

Official Statistics of Japan

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