Japan's Inflation Rate Edges Closer to BOJ Target

The Japanese Consumer Price Index (CPI), excluding fresh food, rose 1.8% in July compared to the same period last year, according to data released by the Ministry of Internal Affairs and Communications on August 21.

This marks the second consecutive month of acceleration, with the growth rate widening by 0.2 percentage points from June's 1.6%. The figure matches the median market forecast.

The increase in utility and water charges drove the overall index higher, pushing it above 102.1, which is based on a new base year of 2025=100. This change has also led to retroactive revisions of historical figures to the new standard, affecting year-on-year growth rates.

The index remains below the Bank of Japan's 2% price stability target for the seventh consecutive month, but the underlying inflation trend is slowly firming up, as evidenced by two consecutive months of growth rate expansion.