Bank of Japan data reveals 2.5-3.0 percent CPI inflation and resilient consumption amid U.S. tariff impacts and Middle East tensions.
Japan’s economy recovered moderately in the second half of fiscal 2025, though exports and industrial production remained flat due to U.S. tariff increases. Corporate profits stayed high overall, but manufacturing faced downward pressure from trade policies.
Consumer prices rose 2.5-3.0 percent year-on-year, driven by wage pass-through and cost effects. Private consumption held firm amid improving employment and income conditions, while housing investment declined and public spending stayed flat.
Labor markets remained tight, and business sentiment stayed favorable despite late-period geopolitical risks in the Middle East.