Japan’s CPI increased 0.2% MoM and 2.7% YoY in August, down from 3.1% YoY in July and the lowest since October 2024, as energy prices see a large drop on the month.

• CPI (ex fresh food) was flat MoM, and the annual rate eased to 2.7% YoY (vs 2.7% YoY expected), down from 3.1% YoY previously and the lowest since November 2024.
• Core inflation was 1.6% YoY for the sixth month in a row in August after a 0.3% MoM increase.
• The Food index increased 0.7% MoM, the strongest increase since January, driven by a 3.3% MoM rise in fresh food prices. However, these were weaker than the gains in August 2024.
• The Energy index dropped -3.6% MoM, the third straight monthly decline, and is now down -3.3% YoY, the largest annual decline since January 2024.
• Furniture & household goods was up 2.0% YoY, the smallest annual increase for this category since March 2022.
• Culture & recreation was up 2.3% YoY, slowing to the weakest annual rate since the beginning of the year.
• Offsetting disinflation elsewhere is an acceleration in transportation & communication to 3.0% YoY, the highest since January 2024.