Japan's annual inflation rate eased to 2.7% in August 2025 from 3.1% in the previous month, marking the lowest reading since October 2024. Electricity prices fell much steeper (-7.0% vs -0.7% in July), while gas prices also dropped after being unchanged previously. Education costs also continued to decline (-5.6% vs -5.6%). Meanwhile, price growth slowed for household items (2.0% vs 2.5%), healthcare (1.3% vs 1.5%), and recreation (2.3% vs 2.6%). Meanwhile, inflation accelerated for housing (1.1% vs 1.0%), clothing (2.9% vs 2.8%), transport (3.0% vs 2.6%), communications (7.0% vs 6.4%), and miscellaneous goods (1.3% vs 1.2%).On the food side, prices rose 7.2%, easing from July’s five-month peak of 7.6%, driven by the smallest gain in rice prices in eight months amid Tokyo’s efforts to curb staple food costs. Core inflation also stood at 2.7%, matching market consensus and reaching a 9-month low. Monthly, the CPI edged up 0.1%, holding steady for the third straight month.