Japan Watch: June CPI: Pipeline inflation pressures building beneath a calm surface

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Japan Watch: June CPI: Pipeline inflation pressures building beneath a calm surface

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Japan Watch

June CPI: Pipeline inflation pressures

building beneath a calm surface

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Tokyo CPI: Broadly flat excluding special factors 26 June 2026

June Tokyo CPI rebounded: Japan‑style core (ex fresh food) rose to 1.6% yoy from 1.3% Economics

in May, and BoJ‑style core (ex fresh food and energy) to 1.9% yoy from 1.6%. The pickup Japan

mainly reflects the fading impact of Tokyo’s water charge waver policy introduced

earlier. Excluding this factor, underlying inflation was essentially flat month on month Takayasu Kudo

relative to May (Exhibit 1-Exhibit 3, see May CPI: Another undershoot on one‑off factors; JapanBofASEconomistJapan

gradual moderation continues 29 May 2026). +81 3 6225 8592

takayasu.kudo@bofa.com

Price changes remained limited overall IzumiJapan EconomistDevalier

Price developments by item were broadly in line with expectations. Medical fees rose BofAS Japan

+81 3 6225 6257

2.4% yoy, reflecting the FY26 revision, but this was offset by the fading impact of last izumi.devalier@bofa.com

June’s mobile phone charge increase. Dining‑out prices increased, but non‑perishable Xiangjin Lyu

food prices continued to weigh on inflation, reflecting negative base effects and lower Japan Economist

BofAS Japan

rice prices (Exhibit 4). Price changes elsewhere, including energy, remained limited. kerwin.lyu@bofa.com

Pipeline inflation pressures building beneath the surface

While CPI continues to stabilize below 2%, inflation pressures are building at the

producer level, driven by higher oil prices. PPI rose to +6.3% yoy in May from +5.3% in

April, with increases not only in petroleum products, basic chemicals, and electricity/gas,