Japan’s core consumer price index (CPI), which excludes fresh food but includes energy, rose 3.1% year-on-year in July 2025, down slightly from 3.3% in June but above market expectations of 3%. The core inflation rate has also remained well above the Bank of Japan’s 2% target, strengthening bets on another interest rate hike this year. Persistent price pressures, coupled with sluggish wage growth, have increased calls for policy tightening. At its July meeting, the BOJ raised its inflation outlook and signaled openness to a hike by year-end. Still, Governor Kazuo Ueda struck a cautious tone, stressing that “underlying inflation” has yet to show a stable alignment with the 2% goal.