Japan Core Inflation Slows to 3.1% as Energy Costs Fall

Japan’s nationwide core consumer price index, which strips out volatile fresh-food costs, rose 3.1% in July from a year earlier, the Ministry of Internal Affairs and Communications said Friday. The increase slowed from June’s 3.3% pace but edged past the 3.0% consensus forecast, marking the eighth straight month that core inflation has remained above 3%. Headline inflation matched the core measure at 3.1%, while the core-core gauge that excludes both fresh food and energy stayed at 3.4%, unchanged from the previous month and in line with estimates. The figures show inflation easing only marginally from recent highs and still running well above the Bank of Japan’s 2% goal. A 0.3% year-on-year decline in energy prices—reflecting lower electricity, gas and gasoline costs—was the main factor behind the deceleration. By contrast, food pressures persisted: prices of items excluding fresh produce climbed 8.3% on the year, and rice remained a major outlier, rising 90.7%, though the pace cooled from more than 100% in June. The data underscore the divergent forces shaping Japanese inflation, with cheaper energy partially offsetting stubbornly high food costs. Policymakers are watching whether the moderation in energy and the gradual easing of the rice shock will bring overall price growth closer to target in the coming months.