Japan reports record trade values and rising inflation

Japan reported record monthly values for both imports and exports in July 2026, resulting in a trade deficit of 634.5 billion yen as import growth outpaced exports. Imports rose 27.8% year-on-year to approximately 12.15 trillion yen, driven largely by an 87.8% surge in the value of crude oil shipments due to higher energy costs.

Exports reached a record 11.51 trillion yen, a 23.2% increase from the previous year, supported by strong demand for semiconductor-related products linked to artificial intelligence infrastructure. Key export destinations included the United States and China.

Simultaneously, Japan's headline inflation accelerated to 1.9% in July, its highest reading of the year. This increase was driven by rising energy costs and a 7% jump in fresh food prices. While government subsidies have attempted to cushion the impact on households, wholesale inflation reached 7.2%. The Bank of Japan has indicated that core inflation may accelerate above 2% in the second half of the fiscal year due to wage increases, rising crude oil prices, and yen depreciation.