On June 21, Japan's Ministry of Internal Affairs and Communications released data showing that the core consumer price index (excluding fresh food) rose 1.4% year-on-year in May 2026. This increase was below the market consensus forecast of approximately 1.5–1.6%, and significantly lower than the 2.2% rise recorded in April.
The main reason for the slower core CPI increase in May was the government's continued extension of its fuel subsidy program, which helped lower retail prices for gasoline, kerosene, and other fuel products. This moderated the pace of price increases in the energy sector, which had been a key driver of inflation in previous months.
However, excluding both fresh food and energy, the so-called core-core CPI still rose 1.9% year-on-year in May, indicating lingering price pressures in items such as services and processed food. The Bank of Japan is closely monitoring price developments as it considers the path toward normalizing monetary policy, with the goal of achieving stable 2% inflation.
