Japan reported headline inflation for July rose 1.9% year on year, the highest level this year, supported by higher energy costs from the Iran war. Core inflation, which excludes fresh food prices but includes energy, came in at 1.8%, matching forecasts, while energy prices rose for the first time since November 2025 despite government price-support measures. The producer price index stood at 7.2% in July, and fresh food prices jumped 7% from 3.9% in June. Core inflation excluding fresh food and energy was 1.9%. Economists at State Street Investment Management said the figures reinforce the likelihood that the Bank of Japan will raise interest rates at its September meeting.
Higher inflation supports BOJ rate hike, pushing yields up
