Japan Macro Information

While April Tokyo CPI was soft due to temporary factors, Mizuho expects inflation to peak above 2.5% in 2027, keeping the BOJ on a hiking path toward 1.50%.

Key Takeaways

• 1.Tokyo April CPI was lower than the 2% target (+1.5% core) due to technical quirks like nursery fee eliminations and energy subsidies, but underlying trend remains intact.
• 2.Core-core inflation is forecasted to rise from 2H 2026 and peak above 2.5% in mid-2027, driven by energy shocks and food price pass-throughs.
• 3.The Bank of Japan (BOJ) is expected to continue rate hikes toward a terminal level of 1.50%, with interest rate declines unlikely until inflation peaks in 2027.

Table of Contents

• Another wave of food price hikes from summer into autumn?
• How long has it typically taken for higher crude oil costs to be passed through to prices?
• Inflation set to peak around mid-2027; significant declines in domestic interest rates perhaps unlikely before then
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