Japan's consumer prices rose for a third consecutive month in July, with core inflation increasing to 1.8% year-on-year, according to data from the Statistics Bureau released on Friday. The reading matched market expectations and followed a 1.6% gain in June, remaining just below the Bank of Japan's 2% target.
Core inflation excluding fresh food and energy climbed to 1.9% from 1.7% in June, while headline CPI advanced to 1.9% from 1.6% in the prior month. The trend reflects persistent upward pressure on prices as businesses pass higher energy and raw material costs to consumers.
Government subsidies on fuel and utilities have mitigated some inflationary shocks from geopolitical tensions, including the U.S.–Iran conflict, but input costs for producers remain elevated. The Producer Price Index surged to its highest level in over three years in July, based on data released the previous week.
The Bank of Japan is expected to consider further interest rate hikes, with policymakers signaling potential action by September or October. The central bank has also projected a sharp increase in inflation in the coming months, citing ongoing supply chain disruptions linked to the U.S.–Iran conflict.
