Japan Economic Comment: Limited impact of 2025 benchmark change

Research evidence excerpt

Japan Economic Comment: Limited impact of 2025 benchmark change

Global Research

14 July 2026ab

Japan Economic Comment Economics

JapanLimited impact of 2025 benchmark change

Go Kurihara

Associate Economist

CPI benchmark will be updated from 2020 to 2025 go.kurihara@ubs.com

+81-3-5293 3000

Japan’s CPI is calculated using a Laspeyres index, which assigns expenditure weights

based on consumption patterns in the base year. The current CPI is benchmarked to

2020, but the reference year will be updated to 2025. Specifically, CPI index from

January 2025 onward will be compiled under the new base, meaning year-on-year

inflation rates will switch to the new benchmark from January 2026. Last Friday, the

Ministry of Internal Affairs and Communications (MIC) released the new 2025

expenditure weights, allowing a preliminary assessment of the likely impact of the

benchmark change. The official backcast estimates for January–June 2026 will be

published on August 7, providing a definitive measure of the revision.

Our estimates suggest little overall revision

Our calculations indicate that the latest core CPI reading for May would remain

unchanged at 1.4% after the shift from the 2020 to the 2025 base year (Figure 1). The

rebase affects CPI through four channels: (1) changes in item weights (weight effect), (2)

resetting the index level to a 2025 annual average of 100 (index-reset effect), (3)

additions and removals of items, and (4) revisions to the measurement methodology for

selected items. Since only the new expenditure weights have been released so far, our

analysis captures only the weight effect and the reset effect.

We estimate that the weight effect would raise core CPI by 10bp, while the reset effect

would lower it by 12bp, implying a net impact of -2bp.