Japan's core inflation rate may drop to nearly 1.5% by early 2026.

Golden Ten Data on May 23, Mizuho Securities economist Ryosuke Katagi said that excluding volatile fresh food and energy prices, the increase in Japan’s consumer price index may slow to between 1.5% and 2.0% in the first quarter of 2026. The so-called core CPI rose 3.0% year-on-year in April, compared to a 2.9% increase in March. This indicator is considered to be a measure of underlying inflation. Despite rising wages, service prices do not appear to show signs of accelerating, while cost drivers, including surging rice prices, are expected to ease, Katagi said. “From the point of view of achieving a stable inflation rate of 2%, it still lacks strength,” he said.