Bank of Japan projects CPI at 2.5-3.0 percent in fiscal 2026, easing to around 2 percent by fiscal 2028 as oil effects fade.
Japan’s economy is expected to grow moderately but at a slower pace due to rising crude oil prices linked to Middle East tensions. Corporate profits and government measures will support growth, though deceleration is likely as energy costs climb.
The Bank of Japan forecasts consumer price inflation at 2.5-3.0 percent in fiscal 2026, driven by higher energy and goods prices. Inflation is projected to ease to 2.0-2.5 percent in fiscal 2027 and stabilize around 2 percent by fiscal 2028 as oil price impacts wane.
Underlying CPI inflation, excluding temporary fluctuations, is expected to align gradually with the 2 percent price stability target. Risks remain tied to Middle East developments and their potential effects on financial markets and economic activity.