Japan July Consumer Sentiment Improves Beyond Market Forecasts

Economics Research 30 July 2026 | 2:50PM JST

Japan: July Consumer Sentiment Improves Beyond Market Forecasts; Expected Inflation Gradually Decelerates

BOTTOM LINE: The Consumer Sentiment Index improved by +1.1 points from the Yuriko Tanaka | previous month in July, exceeding market expectations, although its level still Goldman Sachs Japan Co., Ltd. remains significantly below that in February, before the Middle East disruption. The expected inflation rate one year ahead (our estimate) remained high at 4.55% in July, but has been gradually decelerating from its peak in March (4.85%).

n Consumer Confidence +4 (Relevance: 4; Surprise: +1)

n Consumer Confidence: Jul: 34.9, GS forecast: 34.0, BBG consensus: 34.2, June: 33.8

July Consumer Sentiment Index Improves Beyond Market Forecasts: Japan’s Consumer Sentiment Index, a survey conducted among households of two or more people, improved by +1.1 points from the previous month in July, exceeding the market forecast (+0.4 points). Although the Consumer Sentiment Index has improved for three consecutive months since April, the index level of 34.9 still remains significantly below the February level (39.7), prior to the Middle East disruption. The survey base date was July 15. The Cabinet Office upgraded its assessment of consumer confidence to “showing signs of a recovery” from “softening.”

By components, “employment” (+1.7 points mom) improved significantly, driving the overall index, while all other components also improved from the previous month, including “overall livelihood” (+1.1 points), “willingness to buy durable goods” (+1.0 points), and “income growth” (+0.6 points).

Price expectations one year ahead remain high but gradually decelerate since March peak: In the questionnaire on price expectations one year ahead, announced along with the July Consumer Sentiment Index data, the expected inflation rate (our estimate) was 4.55% in July. While this remains high compared to the level before the Middle East disruption (February: 3.67%), it has gradually decelerated since its peak in March (4.85%). The proportion of respondents expecting prices to rise by less than 2% increased to 10.0% from 8.7% in June, while the proportion expecting prices to rise by 5% or more declined to 52.1% from 54.0% in June.

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Consumer Confidence and Inflation Outlook 1yr Out

Index Percent change yoy Consumption Tax Consumption 5 GFC East Japan 45 Hike Tax Hike Earthquake 4 40

25 Consumer Confidence (LHS) 1 1Y Inflation Expectations (RHS) COVID- /7

Source: Cabinet Office, Data compiled by Goldman Sachs Global Investment Research

Akira Otani Tomohiro Ota Yuriko Tanaka Goldman Sachs Japan Co., Ltd. Goldman Sachs Japan Co., Ltd. Goldman Sachs Japan Co., Ltd.