Japan’s July core inflation forecast at 1.8% on energy costs

Japan’s core consumer prices likely increased 1.8% in July from a year earlier, according to a Reuters poll of economists, as higher energy costs offset easing price pressures in other sectors.

The forecast, published ahead of official data due August 2, marks a slight acceleration from June’s 1.8% rise, which was the slowest pace in over two years. Energy prices, including electricity and gasoline, have remained elevated in recent months, propping up headline inflation despite weaker demand for durable goods and services.

The Bank of Japan has cited persistent inflation as a key factor in its cautious approach to policy normalization, though policymakers have emphasized that price growth remains uneven across the economy. The central bank’s core CPI measure excludes fresh food but includes energy, aligning with the metric tracked in the Reuters survey.

A separate government report is expected to show Japan’s overall consumer prices rose 2.3% year-on-year in July, up from 2.2% in June, according to the same poll. The data underscores the role of energy in shaping Japan’s inflation trajectory amid global commodity volatility and domestic demand dynamics.