Japan's Inflation Picks Up in July as Statistics Bureau Launches Rebased CPI

Japan's inflation data got a little more complicated to read this month — for a routine, procedural reason. On August 21, 2026, the Statistics Bureau of Japan switched its Consumer Price Index over to a new base year, 2025, replacing the 2020-base index it had used previously. Alongside that methodology update, it published July 2026 price data showing inflation picking up pace for a second straight month.

The measure Japan usually leads with — prices excluding fresh food, which is volatile month to month — rose 1.8% from a year earlier, faster than June's 1.6%. A stricter measure that also excludes energy costs, which the Bank of Japan treats as its best read on underlying, demand-driven inflation, rose 1.9%, up from 1.7% in June.

Both readings remain below the BOJ's 2% inflation target, which the core measure has now undershot for seven straight months — partly because government subsidies have been holding down electricity and gas bills. But the direction of travel, upward for a second straight month, is what's getting attention: it feeds into the argument that the central bank has room to raise interest rates again later this year.

The BOJ's next scheduled policy meeting is September 17-18, 2026. As of this report, the bank has given no public indication of what it plans to decide.