Japan Rates Strategy: 2025 CPI rebase: MIC released new CPI weights

Research evidence excerpt

Japan Rates Strategy: 2025 CPI rebase: MIC released new CPI weights

Idea

July 15, 2026 01:15 PM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MJapan Rates Strategy | Japan Hiromu Uezato

Strategist

2025 CPI rebase: MIC released Hiromu.Uezato@morganstanleymufg.comKoichi Sugisaki +81 3 6836-8431

Koichi.Sugisaki@morganstanleymufg.com +81 3 6836-8428

new CPI weights

While markets are distracted by developments around the GPIF,

CPI is beginning its transition toward the base-year revision.

Using the 2025-base weights released by the MIC, we update

our previous estimates of the impact of the base-year revision.

Key Takeaways

The new 2025-base weights were broadly in line with our expectations. The food

weight was just as we had estimated, while imputed rent increased contrary to

our prior estimates.

The weights of newly added items were also mostly in line with our preliminary

estimates, and given their low weights, they are unlikely to become a source of

noise at the time of the revision.

Recalculating the impact of the base-year revision (weight effect + the reset

effect) suggests that the May CPI figures for headline CPI and the core measures

will be broadly unchanged from the published values. That said, US-style core CPI

is likely to be revised up by around 10bp.

Because the food weight rises under this base-year revision, it is worth noting

that the impact of the C-tax cut on food, which is expected to be implemented

next year, could be larger than previously assumed.

Reflecting our latest crude oil price forecast and CPI outlook, we have updated

our BEI forecast. Inflation carry remains attractive, but upside in BEI appears

limited. We maintain our buy-on-dips stance.

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