Japan's Inflation Surges to 1.9% Amid Energy Price Pressures

Japan's inflation rate reached its highest level this year at 1.9% in July, driven by rising energy costs influenced by the Iran war.

The country's core inflation, which excludes fresh food but includes energy, was 1.8%, while wholesale inflation surged to 7.2%, with electricity costs being a major factor.

Government subsidies have helped keep consumer inflation relatively low despite higher energy costs, and the Bank of Japan expects core inflation to rise above 2% in the latter half of fiscal 2026 before easing as oil prices fall.