Japan's Annual CPI Accelerated In July to 7-Month High, Nikkei 225 Extended Weekly Losses to 4%

Akira Ito
21 Aug, 2026
Tokyo

Japan's indexes lacked direction in Friday's trading as global bond yields rebounded and investors reviewed the latest inflation update. 

The Nikkei 225 Stock Average decreased 0.4%, the broader TOPIX inched higher 0.1%, and the yen strengthened to 159.05 against the U.S. dollar. 

Global bond yields rebounded as investors reassessed the latest move from the U.S. Treasury Department to calm volatility and curb the rise in yields in long-term rates.

The yield on 10-year U.S. Treasury notes retraced to 4.71%, Japanese government bonds edged up to 2.85%, and bond yields in Germany and France rebounded to multi-year highs as the initial support for the U.S. Treasury Department's expanded buyback program faded.

 

Japan's Annual CPI Accelerated in July

Japan's inflation accelerated for the second consecutive month in July, marking the largest increase since January. 

Japan's annual consumer inflation accelerated to 1.9% from a marginally revised 1.6% in the previous month, said the Ministry of Internal Affairs & Communications.  

A slower decline in electricity prices, coupled with scaled-back government energy subsidies, drove the pickup in inflation.

At the same time, annual inflation for food prices accelerated to 3.5% from 3.25, transportation edged up to 2.6% from 2.5%, and transportation goods rose to 3.7% from 2.3% in the previous month, respectively. 

Core inflation, which excludes fresh food, accelerated to 1.8% from 1.6% in June, reaching the highest level since March, though it remained the Bank of Japan's 2% target rate for a sixth consecutive month. 

Core-core inflation, which excludes food and energy, which reflects underlying price trends, increased 1.9% in July. 

The ministry officials said it is difficult to assess the underlying inflation trends, given the impact of state subsidies introduced since March to ward off the surge in fuel prices due to higher costs of imported crude oil prices. 

 

Japan Indexes and Stocks 

The Nikkei 225 Stock Average decreased 0.4% to 65,951.94, and the broader TOPIX added 0.1% to 4,064.95. 

For the week, the Nikkei 225 Stock Average fell 4.1%, and the broader TOPIX decreased 3.2%.  

Tokyo Electron increased 0.5% to ¥54,550.0, Advantest Corp. edged up 1.0% to ¥35,730.0, and SoftBank Group decreased 1.6% to ¥5,298.0. 

Nippon Yusen KK soared 4.4% to ¥7,093.0, Mitsui OSK Lines edged up 4.1% to ¥7,245.0, and Kawasaki Kisen Kaisa Ltd jumped 6.5% to ¥3,380.0.