MNI BRIEF: Japan Aug Core CPI Rises 2.7% Vs. July 3.1%

Japan’s annual core consumer inflation slowed to 2.7% y/y in August from 3.1% in July, the Ministry of Internal Affairs and Communications said Friday, as lower energy and food prices excluding perishables weighed on the index.

The reading stayed above the Bank of Japan’s 2% target for the 41st straight month but fell below 3% for the first time since November 2024.

Energy prices dropped 3.3% y/y after a 0.3% fall in July, while food prices excluding perishables rose 8.0%, easing from 8.3% the previous month.

The smaller rise was due largely to the resumption of fuel subsidies, such as gas and electricity aimed at helping households weather the pain from higher living costs.

The underlying inflation rate measured by core-core CPI, which strips out fresh food and energy, rose 3.3% y/y in August, down from 3.4% in July.

Service prices, closely watched by the BOJ as a gauge of the wage-price cycle, increased 1.5% y/y, unchanged from July and still short of the 2% threshold needed for a durable inflation trend.

Processed food prices, which account for 15% of the CPI basket and are seen as sensitive to economic activity, rose 6.5% y/y, quickening from 6.4% in July.