For: households that want to verify their inflation experience in numbers, and small business owners who need to reflect price trends in their pricing and cost management. as of May 7, 2026.
Why look at CPI now?
Many people in Japan feel that the wave of price hikes has eased a bit in early 2026. Indeed, headline CPI for March 2026 came in at +1.5% YoY, well below the +4.0% peak of January 2025.
But this does not mean inflation is over. Much of the deceleration comes from policy effects — the abolition of the provisional gasoline tax surcharge and continued electricity/gas subsidies. Food prices (food excl. fresh food, +5.2%) are still rising. This article walks through the past three years (Apr 2023 – Mar 2026) of monthly data to read the peaks and troughs.
Three CPI series, three stories
- Headline CPI: all items. Most directly reflects what households feel; swings with weather and energy subsidies.
- Core CPI (excl. fresh food): the Bank of Japan’s preferred gauge. Strips out weather noise.
- Core-core CPI (excl. fresh food and energy): best thermometer of underlying inflation driven by wages and services.
The chart: 36 months of monthly YoY change
Three phases stand out.
Phase 1 — 2023: Sticky around 3%
For calendar 2023, headline averaged +3.2% and core +3.1%, the highest in 30 years. A weak yen, high commodity prices, and pass-through into processed foods and dining out kept inflation elevated. Core-core peaked near +4.3% mid-year, signalling strong underlying pressure.
Phase 2 — 2024 H1: Apparent deceleration
Through mid-2024, headline cooled to mid-2% and core-core to low-2%. But much of the drop came from electricity and gas subsidies turning the energy contribution negative — a ‘policy-engineered’ slowdown. When subsidies were scaled back in late 2024, headline jumped back to +3.6% in December, then peaked at +4.0% in January 2025 — a second inflation shock.
Phase 3 — 2025–2026: Rice, energy and policy tug-of-war
2025 saw a sharp rise in rice prices, lifting the ‘food excl. fresh food’ contribution. The fiscal-year 2025 (Apr 2025 – Mar 2026) averages were +2.6% headline, +2.7% core, and +3.0% core-core — core-core above core, a pattern consistent with wage- and services-driven inflation.
In early 2026, the abolition of the provisional gasoline tax and continued utility subsidies pushed the energy contribution sharply negative (–0.45pt in March 2026; gasoline –5.4%, electricity –8.0%). Headline fell to the 1% range, but core-core remained elevated at +2.4%.
Success: households that responded to inflation
- Reviewed fixed costs in 2024: those who switched phone plans and electricity contracts in 2024 cushioned the 2025 rebound. Mobile phone charges in March 2026 were +11.1% YoY due to subsidy roll-off.
- Diversified rice purchases: families that compared and stocked multiple rice brands during the price surge limited the impact to roughly half.
Failure: those who read CPI as just a news headline
- Trusting the 2024 ‘easing’ too much: mistaking subsidy-driven deceleration for the underlying trend, then being caught by the early-2025 reacceleration.
- Ignoring variable-rate mortgages: after the BOJ ended negative rates in March 2024, gradual hikes caught households who hadn’t considered fixing. CPI and rates move together — watching only one is risky.
Three checkpoints going forward
- Watch core-core first. Headline is distorted by subsidies and oil; core-core best captures wage-driven inflation.
- Track when policy effects roll off. Today’s drag from gasoline-tax repeal becomes tomorrow’s base-effect lift.
- Separate food vs. services. Food responds to weather and FX; services to wages — and services inflation is the more persistent.
Conclusion
Japan’s CPI over the past three years was wave-shaped: sticky 3% in 2023, an apparent slowdown in early 2024, reacceleration through 2025, and a policy-driven cooldown in early 2026. Looking past the headline to core-core and contribution breakdowns turns the data into something actionable for households and businesses.
References
- Statistics Bureau of Japan, 2020-base Consumer Price Index, National, March 2026 and FY2025 average (released 24 April 2026)
- Statistics Bureau of Japan, 2024 Annual CPI Report
- Statistics Bureau of Japan, 2023 Annual CPI Report
- Bank of Japan, Outlook for Economic Activity and Prices (Outlook Report), various issues
- OECD, Consumer Prices (monthly inflation statistics)