Japan core CPI rose 1.8% y/y in March, matching forecasts but staying below BOJ’s 2% target for a second month.
Japan core CPI rose 1.8% y/y in March, matching forecasts but staying below BOJ’s 2% target for a second month. Iran war energy shock seen pushing inflation higher in coming months.
Summary Japan CPI (March 2026): Headline rate 1.5% y/y (prior 1.3%) Core CPI (Ex-Food) 1.8% y/y (vs. expected 1.8%, prior 1.6%) Core-core CPI (Ex-Food & Energy) 2.4% y/y (prior 2.5%), slowest rise since December 2024 – Core CPI below the BOJ’s 2% target for a second consecutive month, held down by government fuel subsidies and moderating food inflation Core-core measure eased slightly but remains comfortably above target, pointing to underlying demand-side price pressure Iran war energy shock expected to filter through more forcefully in coming months as companies pass on higher fuel costs Wholesale inflation already rising sharply, acting as a leading indicator for consumer price acceleration ahead Data lands one week before the BOJ’s April 27-28 meeting, where a hold at 0.75% is expected but a hawkish signal on June is anticipated Real wages under threat if energy-driven price rises outpace government subsidy support Japan’s core inflation held below the Bank of Japan’s 2% target for a second consecutive month in March, with government fuel subsidies and moderating food costs providing a temporary buffer against the energy price shock flowing from the Iran war. The respite, however, is widely expected to be short-lived. The core consumer price index, which strips out volatile fresh food costs, rose 1.8% year-on-year in March, matching the median market forecast and picking up from 1.6% in February.
The headline rate came in at 1.5%, up from 1.3% the prior month. A broader underlying measure excluding both fresh food and energy — the so-called core-core index closely watched by the BOJ as a gauge of demand-driven inflation — eased slightly to 2.4% from 2.5% in February, its softest reading since December 2024. On the surface, the numbers are orderly.