What was the year-on-year increase in Japan's core consumer price index (excluding fresh food) for July, and how does it compare to June?

Japan's consumer price index excluding fresh food rose 1.8% year on year in July, accelerating from a 1.6% advance in June — marking the second consecutive month of acceleration. This reading matched the median economist estimate and supports the Bank of Japan’s case for another near-term interest rate hike.

What is the current market probability of a BOJ rate hike on September 18, and what key indicator underpins the BOJ’s policy normalization rationale?

The overnight index swaps market shows about an 80% probability of a BOJ rate hike at its next decision on September 18. The BOJ’s rationale for policy normalization rests heavily on its preferred gauge — the CPI excluding both fresh food and energy — which advanced 1.9% year on year in July, and which the BOJ expects to rise 'clearly above' 2% from the second half of this fiscal year.

Japan’s Inflation Picks Up, Backing BOJ’s Case for Rate Hike

Aug 20, 2026

Japan's CPI rose 1.8% in July, driven by energy and food costs, reinforcing expectations for a Bank of Japan rate hike in September as firms pass higher raw material costs to customers.

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