Japan's Core Inflation Slows Further Ahead of BOJ Policy Meeting

Japan's core inflation slowed for a second consecutive month in June, according to data released Friday by the Ministry of Internal Affairs and Communications, ahead of next week's Bank of Japan (BOJ) policy meeting.

Key figures

1. Core CPI (excluding fresh food): +1.6% year-on-year, in line with market expectations and below the BOJ's 2% inflation target.
2. Core-core CPI (excluding fresh food and energy): +1.7%, down from +1.8% in May.
3. Headline CPI: +1.7% year-on-year, up from +1.5% in May and the highest level recorded so far in 2026.

The difference between headline inflation and underlying inflation may partly reflect continued government subsidies for fuel and utility costs, which have helped moderate the impact of higher global energy prices on households.

The data were released ahead of the BOJ's upcoming policy meeting, where markets broadly expect interest rates to remain unchanged. Softer underlying inflation may reduce expectations for additional near-term policy tightening, although the central bank has indicated that energy prices and broader inflation trends will continue to be monitored when assessing future policy decisions.

Market participants are also likely to follow upcoming inflation releases, developments in global energy markets and further guidance from the BOJ as policymakers assess Japan's economic outlook.

Source: Japan Ministry of Internal Affairs and Communications CPI data (July 24); Bank of Japan policy guidance; compiled from Investing.com reporting.