Tokyo's core consumer price index (CPI) excluding fresh food rose 1.6% year-on-year in June 2026, accelerating from 1.3% in May and marking the first such increase in eight months [1, 2, 3]. The core CPI excluding fresh food and fuel, a measure favored by the Bank of Japan to track underlying inflation trends, rose 1.9% in June, up from 1.6% in May [1, 3]. The overall Tokyo CPI increased 1.7% year-on-year in June [3].
Rising energy prices have played a central role in these inflationary pressures. Kanako Nakamura, economist at Daiwa Institute of Research, explained, "The impact of the Middle East situation is spreading primarily through energy, with a rise in crude oil prices since around February gradually feeding through to electricity and gas costs" [1]. Wholesale inflation climbed to a three-year high of 6.3% in May, reflecting companies passing on higher energy costs to consumers [1]. Nakamura also noted that "price pressures are beginning to spread beyond energy to non-energy items such as food," signaling broadening inflationary trends [1].
Temporary government relief efforts have helped ease some of the burden. Subsidies including a gasoline subsidy introduced by Prime Minister Sanae Takaichi have moderated inflation pressures at the consumer level [3].
The Bank of Japan raised interest rates in June 2026 to a 31-year high in response to these shifts and is expected to consider further hikes at its next policy meeting [1, 3]. Nevertheless, some economists express caution. Takeshi Minami, chief economist at Norinchukin Research Institute, said, "The BOJ may be overly cautious about inflation risks," doubting that energy-driven price rises will push core inflation as high as the 3% target, given easing inflation in the US and Europe [1].
The next Bank of Japan policy meeting will be closely watched for indications on whether the central bank will continue raising interest rates to control inflation pressures.
