Japan Economic Flash: Raising Our FY2027 Inflation Forecasts Due to Weaker Yen, Higher Memory Chip Prices, and Rebound in Food Prices

Research evidence excerpt

Japan Economic Flash: Raising Our FY2027 Inflation Forecasts Due to Weaker Yen, Higher Memory Chip Prices, and Rebound in Food Prices

Economics Research

16 July 2026 | 3:36PM JST

Japan Economic Flash: Raising Our FY2027 Inflation Forecasts Due to

Weaker Yen, Higher Memory Chip Prices, and Rebound in Food Prices

n We raise our inflation forecasts for FY2027. Our forecasts for new core CPI Tomohiro Ota

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(excludes fresh food and energy) in FY2026 and FY2027 are 2.1% (unchanged tomohiro.ota@gs.com

Goldman Sachs Japan Co., Ltd.

from previous forecast) and 2.3% (+0.3pp), respectively.

n The upward revision to our FY2027 forecasts reflect our forex research team’s

revised forecast (12-month forecast: from ¥155/US$ to ¥165/US$), a significant

rise in memory chip prices, and higher food prices partly due to weather factors.

While these factors will accelerate inflation not only in FY2027 but also in

FY2026, our FY2026 inflation forecast remains unchanged, since the rise in

private services prices is tracking below our forecast. Naphtha-flation (the rise in

naphtha-related product prices) took a breather in the June corporate goods

price index (CGPI, goods-PPI equivalent) print. This is consistent with our

forecast that the margin of price increases will narrow as pass-through

progresses downstream. We expect some price increases from June, mainly in

non-durable goods, but the margin of increase in retail prices, which are the

farthest downstream in the supply chain, is likely to be small.

n Meanwhile, our core CPI (excludes fresh food) forecasts for FY2026 and FY2027

are also revised to be 2.1% (-0.2pp from our previous forecast) and 2.3%

(+0.2pp), respectively. The downward revision for FY2026 reflects crude oil