Japan: Inflation uptrend continues in July Tokyo CPI

Research evidence excerpt

Japan: Inflation uptrend continues in July Tokyo CPI

J P M O R G A N Japan Economic Research

31 July 2026

Japan: Inflation uptrend continues

in July Tokyo CPI

The July Tokyo CPI indicated that inflation remains on an upward trajectory, Economic and Policy Research

following June. The rise in inflation was broad-based across goods and services. Ayako Fujita

The global core measure (ex. food and energy) rose 0.2%m/m sa to 1.3%oya, up (81-3) 6736-1172

0.2%-pt from 1.1% in June. The official core CPI (ex. fresh food) rose more ayako.fujita@jpmorgan.com

strongly, reflecting strength in food inflation: it increased 0.3%m/m sa to 1.9%oya, JPMorgan Securities Japan Co., Ltd.

with the oya rate up by 0.3%-pt from the previous month. While these inflation

readings may look low at first glance, we need to note that various government

subsidies are depressing prices across a wide range of goods and services by close

to 1%-pt. Excluding these effects, the underlying inflation is near 3%.

Looking at the breakdown, the only categories with inflation below the BoJ’s 2%

target in July are largely limited to goods and services affected by government

subsidies or fee-waiver programs. For energy, the negative oya rate narrowed from

-2.3% in June to -0.7% in July because the summer electricity subsidies had not yet

been fully reflected in the data. Even so, gasoline subsidies continue to restrain

energy inflation. Meanwhile, the downward effect from the expansion of free

childcare on miscellaneous expenses remains sizable, with the category still at -

6.5%oya in July. Medical costs have moved away from the near-zero inflation seen

before June due to revisions to administered medical service fees from June

onward, but the pace of increase remains relatively contained at 1.5%oya.