Japan CPI: Energy relief, food reality

Research evidence excerpt

Japan CPI: Energy relief, food reality

19 June 2026

Japan CPI EconomicsData Reactions-

Energy relief, food reality Japan

◆ May headline CPI accelerated to 1.5% y-o-y, but government measures on Akiko Kitamura

energy and education continue to keep CPI below the BoJ’s 2% target Economist,The HongkongAsiaand Shanghai

Banking Corporation Limited

◆ Food inflation remains sticky at 3.5% y-o-y, with processed food repricing akiko.kitamura@hsbc.com.hk +852 2996 6676

continuing and cost pass-through broadening across the CPI basket Frederic Neumann

Chief Asia Economist, Co-head

◆ We expect the BoJ to deliver a 25bp hike in December, taking the policy rate Global Research Asia The Hongkong and Shanghai

to 1.25%, as underlying inflation risks remain elevated Banking Corporation Limited fredericneumann@hsbc.com.hk

+852 2822 4556

Justin Feng

Facts Economist, Asia

The Hongkong and Shanghai

• Headline CPI rose 1.5% y-o-y in May, in line with market expectations (HSBC: 1.5%, BBG: 1.5%, Banking Corporation Limited

Prior: 1.4%) justin.feng@hsbc.com.hk +852 22887108

• Core inflation, excluding fresh food, rose 1.4% y-o-y (HSBC: 1.4%, BBG: 1.4%, Prior: 1.4%),

marking a fourth consecutive month below Bank of Japan’s 2% target.

• Core-core inflation, excluding fresh food and energy, rose 1.8% y-o-y (HSBC: 1.8%, BBG: 1.8%,

Prior: 1.9). (On a seasonally adjusted basis, it increased by 0.2% m-o-m.

Please see Table 1 for key details of the May CPI report.

Implications

In line with market expectations, May headline CPI accelerated to 1.5% y-o-y and remained below the

Bank of Japan’s (BoJ) 2% target for a fifth consecutive month. This largely reflects ongoing government

measures, including free private high school tuition from April and the fuel subsidy introduced on 19 March

(see Chart 1).