# Japan's core inflation slows to 1.7% in August, on the day the Bank of Japan raised interest rates > Consumer prices excluding fresh food rose 1.7% from a year earlier, down from 1.8% in July, while inflation excluding both fresh food and energy held at 1.9%. Falling energy prices explain the gap between the two. - Canonical URL: https://forextradingcommunity.com/news/japan-cpi-august-2026/ - Type: Data - Published: 2026-09-19 - Updated: 2026-09-19 - Publisher: Forex Trading Community (https://forextradingcommunity.com), FTC Editorial Team - Currencies: JPY Japan's consumer prices rose 1.9% in August 2026 from a year earlier, unchanged from July, the Statistics Bureau of Japan reported on 18 September. The reading that leaves out fresh food, Japan's usual "core" measure, slowed to 1.7% from 1.8%, while inflation excluding both fresh food and energy held at 1.9%. The figures were published on the day the Bank of Japan raised its policy rate to 1.25% on a 7–2 vote ([report](/news/bank-of-japan-raises-rate-1-25-percent-september-2026/)). ## The three headline measures - **All items**: up 1.9% on a year earlier (July: 1.9%). The index stood at 102.2, with 2025 as 100, and was unchanged from July after seasonal adjustment - **Excluding fresh food (core)**: up 1.7% (July: 1.8%). Prices were 0.1% higher than in July after seasonal adjustment - **Excluding fresh food and energy**: up 1.9% (July: 1.9%). Prices were 0.3% higher than in July after seasonal adjustment The Bureau began publishing on a new 2025 base year with the figures released on 21 August 2026, so every index is now quoted with 2025 equal to 100. ## Energy explains the gap between the two core measures The core rate is lower than the rate that also excludes energy because energy prices are falling. Energy was 0.7% cheaper than a year earlier in August, after being 0.6% higher in July, and it fell 5.0% from July before seasonal adjustment. The Bureau says that wider falls in electricity and gasoline prices alone took 0.09 percentage points off the core rate compared with July. The Bureau also publishes a trial estimate of what government measures are doing. Its calculation puts the combined effect of abolishing the provisional gasoline tax rate and related policies at about −0.62 percentage points on the year-on-year rate in August, of which gasoline accounts for −0.38 and electricity for −0.17. In other words, measured inflation would be higher without them. The figure is the Bureau's own provisional estimate. ## Food and other prices - **Food**: up 3.1% (July: 3.5%). Fresh food rose 6.0% (7.0%) and food excluding fresh food 2.7% (3.0%) - **Furniture and household utensils**: up 4.9% (July: 3.7%) - **Medical care**: up 3.0% (July: 2.1%) - **Transport and communication**: up 2.3% (July: 2.6%) - **Culture and recreation**: up 2.2% (July: 1.9%) - **Housing**: up 1.0% (unchanged) - **Education**: down 3.8% (unchanged), pulled lower by private high-school tuition, which was 73.2% cheaper than a year earlier ## What it means for the Bank of Japan and the yen On the same day, the Bank of Japan said underlying inflation had been "approaching 2 percent" and that it will continue to raise its policy rate. The two August readings sit either side of that description: 1.9% excluding fresh food and energy, and 1.7% for the core measure. One of the two members who voted against the increase, Asada Toichiro, argued that core CPI was still below 2%. For the yen, the Bank has said the pace of further increases depends on the Middle East situation, AI-related demand and the exchange rate. The gap to US rates also remains wide after the Federal Reserve raised its target range to 3.75%–4.00% two days earlier ([report](/news/fed-raises-rates-september-2026/)), which is why [carry trades](/news/carry-trade-explained/) and [USD/JPY](/markets/usd-jpy/) stay sensitive to each Japanese data point. [CPI explained](/news/cpi-inflation-explained-headline-and-core/) shows how headline and core measures differ. Japan's trade deficit also widened in August as imports rose 28% ([report](/news/japan-trade-deficit-august-2026/)), and Tokyo and Washington intervened together to support the yen on 31 July ([report](/news/japan-us-joint-yen-intervention-2026/)). ## What comes next The September figures are due in October. The Bank of Japan's next Monetary Policy Meeting is on 29–30 October. ## Sources - [Statistics Bureau of Japan: Consumer Price Index (2025 base), Japan, August 2026, nationwide summary published 18 September 2026 (in Japanese; the link always shows the latest month)](https://www.stat.go.jp/data/cpi/sokuhou/tsuki/pdf/zenkoku.pdf) - [Statistics Bureau of Japan: Consumer Price Index](https://www.stat.go.jp/english/data/cpi/index.html) - [Bank of Japan: Change in the Guideline for Money Market Operations, 18 September 2026](https://www.boj.or.jp/en/mopo/mpmdeci/mpr_2026/k260918a.pdf) ## Common questions ### What was Japan's inflation rate in August 2026? Consumer prices rose 1.9% from a year earlier for all items, unchanged from July. Excluding fresh food the rate was 1.7% (July: 1.8%), and excluding fresh food and energy it was 1.9% (July: 1.9%), according to the Statistics Bureau of Japan. ### What is Japan's core CPI? Japan's core CPI is the index for all items less fresh food, which strips out the most volatile items. A second measure also leaves out energy. Both are published by the Statistics Bureau in the same monthly report. ### Why is Japan's core inflation lower than inflation excluding fresh food and energy? Because energy prices are falling. Energy was 0.7% cheaper than a year earlier in August, so including it pulls the core rate down to 1.7% from the 1.9% seen when energy is left out. The Bureau estimates that abolishing the provisional gasoline tax rate and related policies lowered the year-on-year rate by about 0.62 percentage points. ### Is Japan's inflation above the Bank of Japan's 2% target? Not in August 2026: all items rose 1.9% and the core measure 1.7%. The Bank of Japan said on 18 September that underlying inflation had been approaching 2%, and it raised its policy rate to 1.25% that day. ### What did the Bank of Japan do on the day of the inflation data? It raised its policy rate from 1.00% to 1.25% on a 7–2 vote on 18 September 2026. Two members voted against; one of them argued that core CPI was still below 2%. ### What is the base year of Japan's CPI? 2025. The Statistics Bureau began publishing on a 2025 base, with the index equal to 100 in 2025, with the figures released on 21 August 2026. August's all-items index was 102.2. ### When is the next Japan CPI release? The September national figures are due in October 2026, before the Bank of Japan's Monetary Policy Meeting on 29–30 October. --- This article is for information only and is not financial advice. Trading forex and CFDs carries a high risk of losing money.